Shareholders of Peoples Drug Stores voted yesterday to triple the number of shares of stock in the company, creating a pool of Peoples' stock that can be used to acquire other firms.
Only a small minority of the owners of the 3.8 million Peoples shares opposed the plan, which will increase the number of shares the company can issue from 5 million to 15 million.
The new shares will not be issued immediately, but will be available if Peoples finds other businesses it wants to acquire by giving their owners Peoples stock, said Adrian C. Israel, chairman and principal stockholder of the 485-store Washington chain.
Israel and President Sheldon W. Fantle told shareholders Peoples is launching "an agressive acquisition program" because other avenues to growth appear limited.
Because of high interest rates, few new shopping centers are being built, so there are few opportunities for opening new stores, Fantle explained. "We're interested in expanding both horizontally and vertically," he added.
In an interview after the meeting, Israel said the primary acquisition candidates under consideration are small drug chains in territories adjacent to areas already served by Peoples.
Peoples' executives have considered buying other retailers outside the drug field, he said, and have looked at taking over suppliers of drugs, health and beauty aids and other products sold by their stores.
Last year People's bought B.H. Kreuger, a New Jersey maker of fragrances and health and beauty products and the Haag Drug chain based in Indianapolis.
Fantle explained how Peoples integrated the 79 Haag stores into the operation and at the same time slashed the cost of operating them: "We eliminated the buying operation, we eliminated the advertising department, data processing, accounting and every expense center we were experiencing."
Haag's outmoded warehouses were replaced with what Fantle called "the most modern distribution center in the country," serving not only those stores but other Peoples' operations in the Midwest.
Fantle disclosed that Peoples' latest acquisition is a small Washington area hearing aid sales firm that will provide the vehicle for moving the chain into that field a part of a plan, to turn the drug stores into "a total health care center."
In the next few months, the first hearing aid department will be opened adjacent to the optical center in one of the Peoples stores in the Washington area, he said. That department, equipped with hearing test gear and staffed by a trained specialist, will become the prototype for several additional units.
He said hearing aids could be a "big-ticket, high-margin" addition to Peoples' merchandise assortment "and still provide good value for consumers." Hearing aids are sold mostly by independent sales people and small specialty shops who until recently have had little competition from aggressive retailers such as Peoples.
In another key move to make Peoples' stock more attractive, the chain's board of directors voted to raise the company's quarterly dividend from 7 cents a share (28 cents a year) to 8 cents (32 cents a year). The increased dividend will be paid March 27 to stockholders as of Feb. 27.