SHOPKO AGREES TO BUY BACK 46% OF STOCK

NEW YORK — Shopko Stores Inc. has signed a definitive contract to buy back 8.2 million Shopko shares held by SuperValu Inc. for around $150 million, or $18.35 a share, the company said Friday.
The shares, about 46 percent of Shopko’s outstanding issues, will be paid for with $125 million in available cash and $25 million in short-term borrowings.
SuperValu will then conduct a secondary offering of the remainder of its stake in Shopko, or 6.6 million shares.
Following the secondary offering, SuperValu will focus on its core retailing operations, which is supermarkets.
SuperValu acquired Shopko in 1971 and, in a 1991 public offering, sold 54 percent of Shopko’s stock. Shopko said that these transactions are expected to be “significantly accretive” to earnings over the long term, excluding one-time charges in fiscal 1998.
Moody’s Investors Service and Standard & Poor’s both placed Shopko’s debt ratings up for review, with negative implications in reaction to the announcement.
Shopko stock closed Friday at 19 1/4, up 1/4, on the New York Stock Exchange.
Shopko, based in Green Bay, Wis., will postpone its annual shareholders meeting until after the transaction closes.
The companies said that Dale Kramer, president, chief executive officer and a board member of Shopko, will add the post of chairman after the transaction closes, succeeding Mike Wright.
Wright and Jeff Girard, SuperValu’s executive vice president and chief financial officer, will leave Shopko’s board. A search is on to find independent replacements.
Ward’s annual meeting will be held May 29 at its Chicago headquarters.

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