YOUNGSTOWN Phar-Mor nears decision on purchase
THE VINDICATOR, YOUNGSTOWN
Phar-Mor's interest in Drug Emporium could lead to an auction in court.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Phar-Mor will decide in the next few weeks if it will bid on acquiring Drug Emporium, an official said.
U.S. Bankruptcy Court in Youngstown set a June 20 deadline for bids to be made, and Phar-Mor will have its review of Drug Emporium completed by then, said John Ficarro, Phar-Mor senior vice president.
"We think it's a good fit for us. We're hopeful we can make it work, but we're just not sure yet," he said.
For the past month, Youngstown-based Phar-Mor has been reviewing documents on Columbus-based Drug Emporium and its proposed sale to Snyder's Drug Stores of Minnetonka, Minn.
Ficarro could not comment on what the documents have shown because Phar-Mor officials signed a confidentiality agreement with Drug Emporium.
If Phar-Mor or any other company files a bid to compete with Snyder's, the court will hold an auction to determine the highest bid.
Possible interest: Ficarro said he hasn't heard of any specific companies that might be interested in bidding on Drug Emporium, but there are many possibilities, including retailers, venture capital firms and real estate companies.
Snyder's has proposed buying 80 of Drug Emporium's 131 stores for about $25 million and paying a significant part of the chain's debts. Drug Emporium, which filed for bankruptcy court protection in Youngstown, intends to close the other stores.
Phar-Mor's situation: In announcing its interest last month, Phar-Mor said it thinks it can operate between 70 and 80 of Drug Emporium's stores profitably. Such a deal would add about $500 million in annual sales to Phar-Mor, which has about $1.3 billion in annual sales.
Phar-Mor said the additional stores would allow it to add about 125 jobs to its Tamco distribution center in Austintown and about a dozen jobs to its headquarters downtown.
Drug Emporium lost $8.7 million in its third quarter, which was completed Nov. 25. It lost $28 million in its most recently completed fiscal year.
Phar-Mor, which has lost money in four of its last five quarters, said the Drug Emporium stores would fit well geographically with its operations.
Drug Emporium has stores in some markets that Phar-Mor serves, such as Philadelphia and Dayton, but few stores are close enough to be direct competitors. It also has a strong presence in some markets that Phar-Mor hasn't entered, such as Buffalo and Detroit.