Jack Eckerd Corp., an aggressive Florida-based drugstore chain, won the bidding contest for the long-bankrupt Revco drugstore chain yesterday, just hours after Rite Aid Corp. walked away.
Eckerd's winning bid will add 33 stores to the one it now operates in Maryland. The privately held company operates 1,678 stores in 13 states from Oklahoma and Texas to New Jersey and Delaware.
With the acquisition of Revco, with 1,141 stores, Eckerd will become the biggest drugstore chain in the country.
Eckerd, based in Clearwater, was considered the dark horse in the race after it finished last in the first round of voting by Revco creditors, which ended last Friday.
But negotiations with the creditors' group continued behind the scenes, and when the fog cleared last evening, Pennsylvania-based Rite Aid had withdrawn its cash-heavy $733 million offer. Eckerd, which has said it would sell stock in the newly enlarged company, was the winner with a sweetened bid estimated at $945 million.
A combined Rite Aid-Revco chain would have created a giant chain along the Eastern Seaboard. "It really would have been a powerhouse," said Joseph C. Ronning, retail analyst with Brown Brothers Harriman in New York.
Rite Aid's greatest concentration of stores is in New York, Pennsylvania and New Jersey, while Revco is strong in the Carolinas, Georgia and Virginia. Rite Aid, based near Harrisburg in Shiremanstown, has 2,444 stores, including 184 in Maryland.
The surprise Eckerd-Revco deal, which must still be approved by the U.S. Bankruptcy Court in Akron, Ohio, will apparently bring an end to 3 1/2 years of bankruptcy protection for the Twinsburg, Ohio-based drugstore chain, which landed in Chapter 11 after a leveraged buyout went sour.
Rite Aid's withdrawal came on the heels of the announcement Tuesday that the Zell/Chilmark L.P. investment group had jumped into the fray with as much as $160 million to sweeten the bid from the creditors' group, which previously had offered $875 million.
But Paul Debban, managing director of reorganized securities for Seidler Amdec Securities, said the group might have been more interested in making sure they got a good price than in taking control of Revco.
"The creditors basically were not like the owners of a company," he said.
Rite Aid said yesterday that the price had simply gone too high. "At the price levels that the current bidding has reached, it would be uneconomical for Rite Aid to continue to pursue this acquisition," the company said in a statement.
Linda R. Morris, a retail analyst with PNC Financial Corp. in Philadelphia, said the stock market reacted favorably to a "prudent decision" on Rite Aid's part.
Stock in Rite Aid, the only public company involved, closed yesterday at $21.625 a share, up 37 1/2 cents.
Ms. Morris said the action showed that Rite Aid's management )) was refusing to get caught up in a bidding frenzy that could jeopardize its future.
"Those things happened in the '80s, but these are the '90s," she said. "I'm sure they wanted the company very badly, but they were not willing to prostitute themselves."