SALT LAKE CITY -- Shareholders of Smith's Food & Drug Centers here and Fred Meyer Inc., Portland, Ore., are scheduled to vote next Monday on whether to merge the two companies.
es with estimated annual sales in excess of $7 billion. Once the deal is completed, Smith's would become a subsidiary of Fred Meyer Inc., and Yucaipa Cos., the Los Angeles-based investment firm that owns 24% of Smith's stock, would become Fred Meyer's largest single shareholder.
A Yucaipa spokesman told SN last week the two companies have been working together since the merger proposal was announced in May, with Smith's already shipping products to Fred Meyer stores here and in Idaho under a contractual agreement and general merchandise personnel from Fred Meyer already working with Smith's nonfood people. With 75% of the aggregate principal amount of Smith's 11.25% senior subordinated notes due 2007 already tendered as a prerequisite to the merger, Smith's said last week it is increasing its payout to bondholders from 118% to 118.5% for each $1,000 of principal amount of notes tendered.
The Yucaipa spokesman said Smith's originally proposed to pay a yield on the bonds of 6.55% but lowered that amount by 12 basis points to 6.43% -- a move that raises the bond price by a half-percentage point.