FRED’S, ROSE’S STORES IN MERGER

NEW YORK — In a sign of further consolidation among regional discounters, Fred’s Inc., a 201-unit chain based in Memphis, Tenn., agreed on Friday to merge with Rose’s Stores Inc., a Henderson, N.C., discounter that emerged from Chapter 11 bankruptcy protection about a year ago.
Rose’s, which turned over 100 percent of its equity to its creditors as part of its Chapter 11 reorganization, operates 105 stores in the southeastern United States. It reported a loss of $599,000 on sales of $491 million in the nine months ended Oct. 28.
Fred’s earnings fell 65.3 percent to $1.9 million on sales of $285 million over the same period.
Under the terms of the deal, Fred’s said Rose’s shareholders will receive about three-tenths of a share of Fred’s class-A common stock for each share of Rose’s. The terms are subject to adjustment for certain changes in the price of Fred’s common during a specified period preceding the mailing of proxy materials.
Fred’s stock gained 3/8 on Friday, closing at 7 3/4 in over-the-counter trading. Rose’s gained 9/16 to close at 1 7/8, also in over-the-counter trading.

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