Lucky Reincorporates In Delaware After Shareholder Vote
DUBLIN, Calif. (AP) _ Lucky Stores Inc. has made a significant advance in restructuring and protecting itself against a takeover by reincorporating in Delaware immediately following shareholder approval of the move.
The action Monday came hours after investor Asher Edelman, who has offered to acquire the Dublin, Calif.-based grocery chain for $37 a share, failed in a court effort to block the vote.
Lucky completed the reincorporation filings in Delaware following the vote, said chairman and chief executive officer John M. Lillie.
Company officials did not comment publicly beyond saying that the reincorporation involves ″two key elements″ of its restructuring. Those are the company’s repurchase of up to 27 percent of its stock at $40 per share in cash and the distribution to shareholders of all the common stock of Hancock Textile Co., one of several non food-related subsidiaries Lucky is spinning off or shedding.
Lucky had said restrictions in California law pertaining to shareholder distributions would have hindered its restructuring plan.
The stock buyback was set to be concluded at midnight tonight, according to the company. Lucky stock opened trading today at $30.50 per share on the New York Stock Exchange.
After a hastily scheduled hearing Monday in U.S. District Court in San Francisco, Judge Charles A. Legge rejected a motion by Edelman’s Plaza Securities Co. for a preliminary injunction halting the vote.
Legge noted that shareholders would be be able to vote on the reincorporation plan. He also said there did not appear to be anything illegal or coercive about Lucky’s Dec. 11 mailing to shareholders about the proposal, as Edelman claimed in his Dec. 15 lawsuit.
Edelman is still seeking $5 million in damages from Lucky.
An attorney for Edelman, John S. Martin Jr., argued unsuccessfully that the proxy materials sent by Lucky were ″totally false and misleading″ and that the company is interested solely in entrenching management.
Lucky attorney Douglas Liebhafsky responded that it was ″absolutely ludicrous″ to allege that the company’s directors had only entrenchment in mind, since 12 of 14 board members are from outside Lucky management.
The judge noted that restructuring plans were under way before Edelman made his first offer to buy the company in September and before the company even was aware Edelman had purchased a substantial amount of its stock.
Edelman’s New York-based Plaza Securities Co. owns about 5 percent of Lucky stock.
Lucky recently sold two major units, its Gemco Department Stores division and the Checker Auto Parts chain.