ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Wednesday, December 27, 1995 TAG: 9512270095
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Knight-Ridder/Tribune|
THE PROPOSED $1.8 MILLION DRUGSTORE MERGER has been considered pretty much a sure thing. But now comes a determined single mom from Cleveland ...
The biggest threat to the $1.8 billion merger of the nation's two largest drugstore chains - Rite Aid Corp. and Twinsburg, Ohio-based Revco D.S. Inc. - may be a single mother from Cleveland who buys her soda, shampoo and pantyhose from a Revco store.
Ruth Brady, a mental health agency administrator from Cleveland, filed a class-action lawsuit Tuesday against Rite Aid, of Camp Hill, Pa., on behalf of all Revco customers, claiming the merger would hurt competition and result in higher prices and less convenience for shoppers. The suit, filed in U.S. District Court in Cleveland, seeks a preliminary injunction to stop the merger.
``If the merger goes through, [Brady] may have to pay a lot more for the goods she wants,'' said William M. Saks, the Cleveland Heights attorney who represents Brady and the rest of the class. ``She shops at a store that is only two blocks from her house. She may lose that convenience.''
On Nov. 30, Rite Aid said it would acquire Revco and create a 4,500-store chain with $11 billion in sales. The acquisition will result in the closing of about 300 stores and Revco's headquarters in Twinsburg.
About 1,100 Revco employees will lose their jobs in Twinsburg, and industry experts estimate about 6,000 employees around the country will be displaced.
Rite Aid Chairman Martin L. Grass has said the company does not expect federal regulators to find any antitrust problems with the merger. But Saks said he is confident the court will side with his client.
``There are loads of cases striking down mergers where the new combined market share is above single digits,'' Saks said. ``My research shows that in Northeast Ohio the merged company would have a market share of more than 30 percent.''
Rite Aid officials said they plan to complete the Revco acquisition by spring. A Rite Aid offer to buy Revco stock for $27.50 a share in cash went into effect this month and is to expire Jan. 2. The offer was designed to acquire 50.1 percent of Revco's common stock. About 19.7 percent of Revco's stock is already set for Rite Aid control through a separate agreement between Rite Aid and Zell/Chilmark Fund owner Sam Zell, who is Revco's co-chairman.
Brady declined comment on the lawsuit.
LENGTH: Short : 50 linesby CNB