SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 15, 1999
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Phar-Mor, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-27050 25-1466309
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(State or other jurisdiction (Commission (I.R.S Employer
of incorporation) File Number) Identification No.)
20 Federal Plaza West, Youngstown, Ohio 44501-0400
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(Address of principal executive office) (Zip code)
Registrant's telephone number including area code (330) 746-6641
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(Former name or former address, if changed since last report)
Exhibit Index appears on Page 5
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Item 2. Acquisition or Disposition of Assets.
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On March 15, 1999, Phar-Mor, Inc. ("Phar-Mor") issued a press release
announcing, among other things, the completion of the merger (the "Merger") of
its wholly owned subsidiary Pharmacy Acquisition Corp. ("PAC") with and into
Pharmhouse Corp. ("Pharmhouse"), pursuant to the Agreement and Plan of Merger
dated as of December 17, 1998 among Phar-Mor, PAC and Pharmhouse (the "Merger
Agreement"). The Merger was completed on March 15, 1999.
As a result of the Merger, Pharmhouse became a wholly owned subsidiary
of Phar-Mor. In addition, subject to the terms of the Merger Agreement, each
share of the common stock of Pharmhouse was converted into the right to
receive $2.88 in cash. The total purchase price payable in connection with
the Merger is approximately $33.51 million, consisting of $7.51 million in
cash plus the assumption of approximately $26.0 million in debt.
The purchase price and the other terms and conditions of the Merger were
negotiated over a period of approximately two months between representatives
of Phar-Mor and Pharmhouse. Jefferies & Co., Inc. acted as financial adviser
to Pharmhouse in connection with the Merger and delivered a written opinion to
the Board of Directors of Pharmhouse to the effect that the purchase price was
fair from a financial point of view for the holders of Pharmhouse's common
stock. At a special meeting of Pharmhouse's stockholders held on March 4,
1999, the stockholders of Pharmhouse voted upon and approved the Merger.
Phar-Mor and PAC financed the payment of the purchase price and all
other fees and expenses associated with the Merger through cash from
operations and from borrowings under Phar-Mor's revolving credit facility, the
Amended and Restated Loan and Security Agreement, dated as of September 10,
1998, among Phar-Mor and BankAmerica Business Credit, Inc.
In connection with the Merger Agreement, certain stockholders of
Pharmhouse who collectively owned 740,715 shares of Phar-Mor's common stock
entered into Voting and Payment Agreements with Phar-Mor pursuant to which
they agreed, among other things, to vote their shares of Pharmhouse common
stock with respect to the Merger in accordance with the recommendation of the
Pharmhouse Board of Directors.
Pharmhouse, which is based in East Brunswick, New Jersey, operates 32
discount drug stores in eight mid-Atlantic and New England states under the
names "Pharmhouse" and "The Rx Place" and has annual revenues of approximately
$200 million. Phar-Mor intends to continue to operate the Pharmhouse and Rx
Place stores under their current names, and no store closings are currently
expected as a result of the acquisition.
The foregoing description of the Merger is qualified in its entirety by
reference to the Merger Agreement and the related agreements attached as
Exhibits 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6, and by this reference made a part
hereof. A copy of Phar-Mor's press release dated March 15, 1999 announcing,
among other things, the transactions described above is attached hereto as
Exhibit 99.1, and by this reference made a part hereof.
Note:
Forward-looking statements included in this Report with respect to the
Merger are subject to certain risks and uncertainties that could cause actual
events and results to differ materially from those set forth in such <PAGE>
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statements. Such risks and uncertainties include, without limitation: the
possible liability of Phar-Mor successfully to integrate the operations of
Pharmhouse following the Merger; unanticipated negative results of litigation,
governmental proceedings or environmental matters; and other risks and
uncertainties as may be detailed from time to time in Phar-Mor's public
announcements and filings with the Securities and Exchange Commission.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of the Business Acquired
To be filed by amendment within the period required by Item 7(a)(4) of
Form 8-K.
(b) Pro Forma Financial Statements
To be filed by amendment within the period required by Item 7(a)(4) of
Form 8-K.
(c) Exhibits
2.1 - Agreement and Plan of Merger dated as of December
17, 1998 among Pharmhouse Corp., Phar-Mor, Inc. and Pharmacy
Acquisition Corp. Filed as Exhibit 99.2 the Registrant's
Form 8-K Report dated December 17, 1998 (the "December 17,
1998 8-K") and incorporated herein by reference.
2.2 - Subordinated Convertible Note Purchase dated as of
December 17, 1998 between Pharmhouse Corp. and Phar-Mor, Inc.
Filed as Exhibit 99.3 to the December 17, 1998 8-K and
incorporated herein by reference.
2.3 - Voting and Payment Agreement dated as of December
17, 1009 between Phar-Mor, Inc. and Kenneth Davis. Filed as
Exhibit 99.4 to the December 17, 1998 8-K and incorporated herein
by reference.
2.4 - Voting and Payment Agreement dated as of December 17,
1998 between Phar-Mor, Inc. and Marcie Davis. Filed as Exhibit
99.5 to the December 17, 1998 8-K and incorporated herein by
reference.
2.5 - Voting and Payment Agreement dated as of December
17, 1998 between Phar-Mor, Inc. and Anne Brecker. Filed as
Exhibit 99.6 to the December 17, 1998 8-K and incorporated herein
by reference.
2.6 - Voting and Payment Agreement dated as of December 17,
1998 between Phar-Mor, Inc. and Manfred Brecker. Filed as
Exhibit 99.7 to the December 17, 1998 8-K and incorporated
herein by reference.
99.1 - Press Release dated March 15, 1999. Filed herewith.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Phar-Mor, Inc.
Date: March 15, 1999 By: /s/ John R. Ficarro
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John R. Ficarro
Chief Administrative
Officer
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EXHIBIT INDEX
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Exhibit Number Description
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99.1 Press Release
Exhibit 99.1
[Phar-Mor LOGO HERE]
PHAR-MOR, INC.
20 FEDERAL PLAZA WEST
P.O. BOX 400
YOUNGSTOWN, OHIO 44501-0400
330-740-1054
330-740-2985 FAX
NEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWSNEWS
FOR IMMEDIATE RELEASE
PHAR-MOR, INC. COMPLETES ACQUISITION OF PHARMHOUSE CORP.
CREATING A 138 DISCOUNT DRUGSTORE CHAIN IN 24 STATES
Transaction will Bring Phar-Mor's "Don't Pay Drugstore Prices" Concept
To New Locations
Corporate-wide Consolidation to Lead to Reduced Administrative and Operating
Costs
YOUNGSTOWN, OH, AND EAST BRUNSWICK, NJ, MARCH 15, 1999 -
Phar-Mor, Inc. (PMOR: NASDAQ) and Pharmhouse Corp.(PHSE: NASDAQ) today
announced that they have completed the acquisition by Phar-Mor of Pharmhouse
Corp., thereby creating a discount drugstore chain of 138 stores operating
under the names "Phar-Mor", "Pharmhouse" and "The Rx Place" in 24 states. The
first phase of consolidation, which will begin immediately, will bring Phar-
Mor's "Don't Pay Drugstore Prices" concept to the Pharmhouse locations through
a re-merchandising program that will offer all shoppers a large selection of
quality products at deep discount prices.
As part of the transaction, Phar-Mor paid approximately $7.51 million in cash
plus the assumption of approximately $26.0 million in debt, for a total
valuation of approximately $33.51 million for Pharmhouse Corp. Under the
terms of the agreement, Phar-Mor will pay each Pharmhouse shareholder $2.88
per share in cash.
-more-<PAGE>
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Phar-Mor also announced that the corporate-wide consolidation will lead to
reduced administrative and operating costs through economies of scale by
leveraging Phar-Mor's state-of-the-art distribution and warehouse systems.
Redundant operations will be phased out and the Pharmhouse headquarters
operations, located in East Brunswick, New Jersey, will be consolidated with
Phar-Mor's headquarters in Youngstown, Ohio during the next 90 days. The 32
Pharmhouse and Rx Place stores will continue to operate under their current
names and no store closings are currently expected.
"The addition of the Pharmhouse and Rx Place stores to the Phar-Mor chain,
along with the recent launch of our online vitamin store, PVSvitamins.com,
accelerates our growth strategy," said David Schwartz, President and Chief
Operating Officer of Phar-Mor. "These recent developments will not only help
us move into new markets, they will also help us better serve our customers
and build shareholder value. By increasing our operating efficiencies, we
will be able to offer all of our customers high-quality products at the lowest
prices around. As a result, we expect that this acquisition will be accretive
to Phar-Mor's earnings in our first full fiscal year operating these stores
and significantly more accretive in the second full year."
Phar-Mor is a retail drugstore chain operating 138 stores under the names
"Phar-Mor", "Pharmhouse" and "The Rx Place" in 24 states with annual revenues
of approximately $1.3 billion. Phar-Mor's online vitamin store is accessible
at www.pvsvitamins.com and through the corporate Web site at www.pharmor.com.
The Company's common stock is traded on the NASDAQ National Market under the
symbol "PMOR".
This press release contains statements relating to the future results of Phar-
Mor, Inc. and its market share in the industry (including certain projections
and business trends) that are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from projected as a result of certain risks and uncertainties,
including, but not limited to, market acceptance of Phar-Mor's stores and
merchandising concepts, changes in political and economic conditions, demand
for and market acceptance of new and existing products, availability of new
products, increased competition as well as other risks and uncertainties
detailed from time to time in the filings by Phar-More, Inc. with the
Securities and Exchange Commission.
Contacts:
For Phar-Mor: For Pharmhouse:
Vicki Elkins Marcie Davis
(212) 848-7784 Executive Vice President
Or Kenneth Davis
President, CEO and COO
(732) 698-1166
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