BOSTON -- Zayre Corp. has announced plans for a major restructuring in which it would spin off its Warehouse Club division and merge with its 83 percent-owned TJX subsidiary.
Under the company's plans announced Monday, Zayre would pay stockholders about a $3.50-a-share cash dividend or approximately $200 million based on some 56 million Zayre shares outstanding. The cash comes from the recent sale of Zayre's discount store division to Ames Department Stores.
Zayre stockholders would own shares in two new corporations:
-The new Zayre, to be renamed TJX Companies, would result from a merger between 'most non-operating assets and liabilities of Zayre Corp.' and the TJX Companies, which includes the T.J. Maxx and Hit or Miss chains as well as the Chadwick's of Boston mail order operation.
-Zayre's Warehouse Clubs division would own the BJ's Wholesale Club and the HomeClub operations.
Maurice Segall, chief executive officer of Zayre since 1978, said he would resign after the restructuring. Ben Cammarata, 48, of TJX and John Levy, of the warehouse division -- already heads of their divisions - would become CEOs of their respective companies.
Although the stock market reacted negatively, David Williamson, retail analyst with Advest Group in Hartford, Conn., termed the restructuring 'ultimately' a good move. The Warehouse Clubs division 'has turned the corner (to profitability) and has the potential to be a real jewel,' he said.
'It's very similar to what they did a year and a half ago when they extracted TJX from Zayre. Now people can see what TJX is worth,' Williamson said.
Zayre stock was down 75 cents a share to $25.63 and TJX fell $1 to $23.50 in trading Monday. 'A lot of this (drop) is just confusion,' Williamson said. 'As people get to understand this better, I think the price will begin to move up.'
Williamson valued the entire package over the next year as worth $36.75 for each current share of Zayre.
The deal would be contingent on an Internal Revenue Service ruling that it not be a taxable event to shareholders, said Steven Wishner, Zayre's treasurer. TJX directors would have to agree, too, he said.
Zayre sold off its money-losing 388-store discount store division in September to Ames in an $800 million cash and stock deal. The troubled discount stores had been hurting Zayre's financial performance and its stock price, analysts said.
Ames Monday announced it would close 74 Zayre discount stores, mostly in the Southeast. Wishner said this was unrelated to Zayre's restructuring.
The divisions making up the new TJX Companies, whose name would be changed at the Zayre Corp.'s 1989 annual meeting in June, had $1.82 billion in sales in the fiscal year ended Oct. 29.
The Warehouse Clubs division includes BJ's Wholesale Club, a warehouse operation based in the East, and the HomeClub operations, a do-it-yourselfers' lumber and building materials warehouse business in the West. These two had combined sales of $1.54 billion for the past year.
Under the plan, the company would first distribute to its stockholders all the shares of a new company that would own the Warehouse Clubs division. Minority stockholders in the current TJX Companies would receive 1.35 shares of Zayre common stock -- after the $3.50 cash dividend is paid -- for each share they hold of TJX.