UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 21, 1997 (July 17, 1997)
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Date of Report (Date of earliest event reported)
HECHINGER COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 0-7214 52-1001530
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1801 McCormick Drive, Largo, Maryland 20774
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 341-1000
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
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On July 17, 1997, Hechinger Company (the "Registrant") announced that
it entered into an Agreement and Plan of Merger, dated as of July 17, 1997 (the
"Merger Agreement"), among the Registrant, Hechinger Acquisition, Inc., a
Delaware corporation, and BSQ Acquisition, Inc., a Delaware corporation ("BSQ
Acquisition"). Pursuant to the Merger Agreement, each share of the Registrant's
Class A Common Stock and Class B Common Stock (collectively, the "Common Stock")
issued and outstanding immediately prior to the effective time of the merger
(the "Merger") will be converted into the right to receive $3.00 in cash,
without interest. The closing of the transactions contemplated by the Merger
Agreement is subject to the satisfaction or waiver of several conditions
including, without limitation, approval of the Merger Agreement and the Merger
by the requisite vote of the holders of the Common Stock, the closing of the
transactions contemplated by the Purchase and Sale Agreement, dated as of July
17, 1997, among Kmart Corporation, Builders Square, Inc. and BSQ Acquisition,
and compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Registrant's press release dated July 17, 1997 is filed herewith as
Exhibit 20 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
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(c) Exhibit.
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20. Press release of Registrant dated July 17, 1997.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Current Report to be
signed on its behalf by the undersigned thereunto duly authorized.
HECHINGER COMPANY
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(Registrant)
By /s/ Mark R. Adams
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Mark R. Adams, Esq.
Senior Vice President, Treasurer
and Secretary
Date: July 21, 1997
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
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20. Press release of Registrant dated 5
July 17, 1997.
EXHIBIT 20
Hechinger Company
1801 McCormick Drive
largo, MD 20774
301 341-1000
FOR IMMEDIATE RELEASE
HECHINGER COMPANY, LEONARD GREEN & PARTNERS, LP AND KMART CORPORATION ANNOUNCE
AGREEMENT TO FORM NATION'S THIRD LARGEST HOME IMPROVEMENT RETAILER
LARGO, MARYLAND -- July 17, 1997 -- Hechinger Company (Nasdaq-NNM: HECHA and
HECHB), Leonard Green & Partners, LP and Kmart Corporation today jointly
announced they have reached a definitive agreement to create the nation's third
largest home improvement chain by combining Hechinger Company and Kmart's
Builders Square.
Leonard Green & Partners will own 100 percent of the new company through an
investment partnership it manages, although Kmart will receive a warrant to
purchase a minority interest at a later date. Holders of Hechinger Company's
Class A Common Stock and Class B Common Stock will receive $3.00 cash per share.
With annual revenues in excess of $4.5 billion, the combined companies will have
279 stores in 29 states and the District of Columbia and locate its new
headquarters at Hechinger's current offices in Largo, Maryland.
Anthony Petrillo, a seasoned retail executive with substantial turnaround
experience, will serve as acting Chief Executive Officer of the new company.
With more than 35 years experience in retailing, Petrillo has worked with
Leonard Green & Partners in its retailing portfolio companies including Thrifty
PayLess, Inc. since 1994.
Jonathan Sokoloff, a partner at Leonard Green & Partners, LP said, "We are
excited by the opportunities to combine the companies into a strong number three
player in the home improvement sector. We believe the combination provides major
opportunities for expense savings, marketing synergies and improved purchasing
power. We also have provided the new company with the financial flexibility to
commit significant capital to refurbish, remodel and remerchandise its stores to
improve customer service and revitalize business."
John W. Hechinger, Jr., Chairman and Chief Executive Officer of Hechinger
Company, stated, "I believe a price of $3.00 per share for the outstanding A and
B common shares of the company is fair. It represents a 100 percent premium over
the Class A price the week prior to our announcement of a possible transaction.
I am also pleased that the transaction reflects my belief that all common
shareholders of Hechinger Company should be treated equally. The combined
company will have the strength to be successful in our competitive industry and
will provide opportunities for career growth for associates at both Hechinger
and Builders Square."
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Kmart's Marvin P. Rich, Executive Vice President, Strategic Planning, Finance
and Administration, said, "We're pleased by the agreement and clearly recognize
opportunity for the new company to create a large, financially sound home
improvement business that will be competitive in markets nationwide."
Financing for the transaction is being arranged by The Chase Manhattan
Corporation in conjunction with BankAmerica Business Credit, Inc. and Citicorp,
USA, Inc. a subsidiary of Citibank.
The transaction is subject to receipt of customary regulatory approvals, receipt
of bank financing and approval by the shareholders of Hechinger.
Kmart's Builders Square operates 162 home improvement stores primarily in the
Midwest and Southwest with 1996 sales of approximately $2.4 billion.
Hechinger Company operates 117 home improvement stores (64 Hechinger stores, 52
Home Quarters Warehouse stores and one Better Space store) primarily in the
Midwest and on the East Coast with 1996 sales of approximately $2.2 billion.
Leonard Green & Partners, LP is a Los Angeles-based private merchant banking
firm that specializes in organizing, structuring and sponsoring management
buyouts of established companies. In 1994, Leonard Green & Partners acquired
PayLess Drug Stores Northwest, Inc. from Kmart and merged it with Thrifty
Corporation to form Thrifty PayLess, Inc., the largest drug store chain on the
West Coast, which late last year was acquired by Rite-Aid Corporation for total
consideration of $2.5 billion. Leonard Green Partners, LP currently has in
excess of $500 Million of private equity capital under management.
Contacts: W. Clark McCelland
Executive Vice President
Chief Financial Officer
(301) 925-3005
Jonathan Sokoloff
Partner
Leonard Green & Partners, LP
(310) 954-0444
Shawn M. Kahia
Vice President, Corporate Affairs
Kmart Corporation
(810) 637-4201
