BUTTREY BUY TALKS END

ELLIOT ZWIEBACH

GREAT FALLS, Mont. -- Buttrey Food & Drug here said last week discussions with a potential buyer have been terminated for undisclosed reasons.

Chain officials declined to say whether Buttrey is for sale, "but the board of directors has an obligation to look at any offer that's presented to us," Wayne Peterson, chief financial officer and secretary, told SN last week.

Local observers said the chain is likely to consider all serious offers.

Buttrey officials declined to name the potential buyer at the time the chain disclosed the discussions a week earlier, and they maintained that position last week, reportedly because of an agreement with that company to keep its name secret, observers said.

As reported, industry observers speculated that the buyout offer probably came from a direct competitor, such as Albertson's, Boise, Idaho; Safeway, Oakland, Calif., or Supervalu, Minneapolis. Some observers said the offer also might have come from an operator with stores in areas contiguous to Buttrey's such as Associated Grocers, Seattle, or Smith's Food & Drug Centers, Salt Lake City.

Spokesmen for Albertson's, Safeway, Supervalu and Associated Grocers declined comment, while those at Smith's could not be reached for comment.

Officials said the potential buyer had originally approached the 39-unit chain with a proposal to acquire all its common stock for a price in the area of $10 per share, in cash -- approximately $86 million -- plus assumption of $43.9 million in debt.

Lesa Sroufe, a securities analyst with Ragen McKenzie, Seattle, told SN the proposed acquisition price was a reasonable one, "since the company reportedly feels a good value for Buttrey is something greater than the tangible book value of $9.50 per share."

The majority of Buttrey stock is owned by Freeman & Spogli, Los Angeles-based investment bankers.