Phar-Mor Drops Plan to Buy ShopKo

Phar-Mor Inc. scrapped its plan to buy ShopKo Stores Inc. as skepticism about combining the discount chains pushed down Phar-Mor’s stock. The retailers said in September that they would form a new company, Cabot Noble Inc., in a transaction valued at about $1 billion in stock and assumed debt. The value had fallen to about $870 million with the 38% drop in Phar-Mor’s stock. At the same time, an investment group that controls 40% of Phar-Mor’s shares--owned by Phar-Mor chief Robert Haft and FoxMeyer Health Corp.--disagreed over whether to support the ShopKo transaction. FoxMeyer Health, which has since changed its name to Avatex Corp., declined to comment. Phar-Mor, based in Youngstown, Ohio, operates 103 discount stores; Green Bay, Wis.-based ShopKo runs 130 discount stores. Phar-Mor’s shares rose 37.5 cents to close at $5.375 in Nasdaq trading. Shares in ShopKo rose $1.25 to close at $16.50 on the New York Stock Exchange.