Lucky Will Pay $20 Million if It Cancels Deal

Lucky Stores agreed to pay $20 million if it breaks an agreement to be acquired in a $2.4-billion leveraged buyout arranged by the Gibbons, Green, van Amerongen investment firm, according to the merger agreement filed Friday with the Securities and Exchange Commission.

The cancellation fee would be paid to LSI Acquisition Corp., the entity formed by Gibbons, Green to buy the Dublin, Calif., supermarket chain, if any other group acquires a majority of Lucky’s shares, or for certain other reasons. Lucky also agreed to pay LSI Acquisition $10 million if LSI cancels under certain conditions.

Analysts said the inclusion of the cancellation fees further signals Lucky’s determination to remain independent, and, specifically to avoid a hostile takeover by the owner of the rival Alpha Beta supermarket chain. However, the analysts also said the cancellation fees aren’t likely to deter American Stores Co, Alpha Beta’s Salt Lake City -based parent.

American Stores officials couldn’t be reached for comment. Earlier Friday, the company extended its $45-a-share, or $1.74 billion, cash tender offer for Lucky shares to May 13. It also again asked Lucky to provide it with the same non-public information Lucky gave to other prospective buyers. American Stores said the extension of the tender offer is to provide its officials time to consider whether to increase the company’s bid for Lucky.

The Gibbons, Green proposal would pay Lucky shareholders $61 a share in cash and stock. American Stores has propsed a $60-a-share offer that would come in two stages, with stockholders receiving $60 a share in cash for 85% of Lucky shares and $60 a share in stock for the remainder.

American Stores Chairman L. S. Skaggs also said the company is willing to go higher if it can be assured of values that justified a higher price.