After changing their minds for the second time, directors of Strother Drug Co. have accepted an offer to sell the Lynchburg wholesale drug business to Alco Standard Corp. of Valley Forge, Pa., for about $13.6 million.
Strother had agreed to merge with Alco Standard last May, then decided in August to accept a richer offer from Bergen Brunswig Corp. of Los Angeles. On Friday Alco announced it had bettered Bergen's bid by more than $1.5 million and had signed a new agreement with Strother.
Alco Standard is a $2-billion-a-year conglomerate whose more than two dozen lines of business include a rapidly expanding wholesale drug distribution operation. Like other drug distributors Alco Standard has acquired in the last several years, Strother will operate autonomously with its present management, according to Strother President J.C. Klein.
The latest bid calls for Alco Standard to make a public offer of $16 a share for any and all of Strother's 840,000 shares of common stock and to pay $500 a share for the approximately 240 shares of Strother preferred.
A small group of shareholders who control more than 30 percent of Strother have already agreed to accept the $16 bid, providing Alco Standard's offer is made promptly, Strother officials said.
Alco Standard last spring offered $13.25 in cash or stock for Strother shares and $100 apiece for the preferred stock. Then Bergen came in with an offer of $15.25 per common share and $500 for the preferred.
Bergen Brunswig was reported Friday to be considering another offer. Klein said Strother officials had no intention of becoming the prize in a bidding war, "but we knew that would happen."
When the first offer was made, he said, "a significant group of shareholders thought it was an attractive price and decided to accept. When you do that you immediately open up a can of worms."
That can of worms has turned out to be worth an extra $2.75 a share -- about $2.3 million total -- to the owners of Strother common stock and $400 a share -- $92,000 -- to the preferred stockholders.
Strother is a $54-million-a-year business that distributes drugs and sundries in southern Virginia, most of West Virginia and part of North Carolina. Strother earned a profit of about $1 million last year.