Jack Eckerd Corp., the Florida-based drugstore company that had seemed on the brink of taking over the bankrupt Revco D.S. Inc. chain, retreated today in the face of a determined defense by Revco management.
Eckerd said it would "postpone indefinitely consideration of its plan of reorganization for Revco" and let a management-supported plan go forward for confirmation by the U.S. Bankruptcy Court in Akron, Ohio. In return, Twinsburg, Ohio-based Revco agreed to pay Eckerd $7.5 million to cover expenses it incurred in its takeover bid.
Stewart Turley, chairman of Eckerd, cited "significant additional costs" and delays that would have resulted if his company kept up the fight.
Revco said the "enterprise value" of the bid was about $925 million. Eckerd had valued its combined cash and stock bid at $975 million, but that figure that was disputed by Revco management.
Under Revco's now-uncontested plan, creditors will be issued stock in the reorganized company, which would emerge from bankruptcy as a publicly trade corporation around late April. If the court confirms the Revco plan at a hearing tomorrow, it will be sent to creditors for a vote by March 6.
"At this point we have the support of the main creditors' committees," said Diana Lueptow, Revco's public relations director. She added that Revco does not expect any other contestants to enter the long struggle for control of the company.
"It's certainly a relief," she said.
Revco filed for Chapter 11 bankruptcy 3 1/2 years ago. Last month, Eckerd was the apparent winner in a three-way bidding war for Revco, after Rite Aid Corp. dropped out and creditors participating in a management-backed bid threw their support to Eckerd.
But management regrouped, with the help of new financing from Zell/Chilmark L.P., an investment group that specializes in troubled companies, and won back support from creditors with a sweetened bid.
Revco operates 1,150 drugstores in 10 Eastern and Midwestern states, including 29 in Maryland. Eckerd operates 1,675 drugstores in 13 states, only one of which is in Maryland.