SALT LAKE CITY -- American Stores Co. raised its offer for Jewel Cos. to $75 a share Thursday, and the two companies said they were in agreement on a merger that would create a nationwide chain of grocery and drug stores.
American Stores of Salt Lake City had previously offered $70 cash for common shares of the Chicago based Jewel Cos.
American said it was raising its cash offer for Jewel preferred stock to $53.47 from $49.91 per share.
Jewel said it was recommending that shareholders desiring cash accept the offer.
American is the nation's fourth-largest supermarket operator and Jewel is ranked number six, on the basis of sales. American Stores had $7.9 billion in sales in its latest fiscal year, and Jewel rang up $5.7 billion in annual sales. American has 60,000 employees and Jewel has 57,000.
Aamerican operates more than 1,000 supermarkets and drugstores under the names Acme, Alpha Beta, Skaggs, and Rea and Derick. Its operations include stores in the east and west, while Jewel is strongest in the Midwest.
Jewel's operations include 324 supermarkets, 499 drug stores, 303 convenience stores and 125 discount grocery stores. On Wednesday, Jewel announced plans to sell the discount grocery stores to investor groups.
The agreement also provides for a merger following the tender offer in which outstanding Jewel common would be converted into the right to receive securities having a market value equivalent to $75 per common share.
The announcment said Jewel preferred shares not tendered for cash would either remain outstanding with conversion rights, or be converted into common shares immediately prior to the merger.
Jewel said it was granting to American Stores an option to purchase 2.1 million common shares representing 18 percent of the oustanding common for $75 per share cash.
L.S. Skaggs, chairman and chief executive, said the merger was structured so that it could be carried out quickly. The announcement said Skaggs would be chairman and chief executive following the merger.
