THE VINDICATOR/YOUNGSTOWN

THE VINDICATOR/YOUNGSTOWN
An acquisition would boost Phar-Mor's local operations, an official said.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Phar-Mor is interested in buying an Ohio-based discount drugstore chain that already has a sale agreement with another company.
If successful, an acquisition of Drug Emporium would boost Phar-Mor's local operations, said Gary Holmes, a company spokesman.
Phar-Mor would close Drug Emporium's executive offices in suburban Columbus and handle all administration from its Youngstown headquarters. It also would distribute products to Drug Emporium stores from its Tamco Distribution warehouse in Austintown, Holmes said.
Other deal: Phar-Mor, however, has to first determine if it can delay a deal that Drug Emporium has struck with Snyder's Drug Stores of Minnetonka, Minn.
Snyder's plans to buy 80 of Drug Emporium's stores for $25 million and pay a significant part of the chain's debts. Drug Emporium said it intended to close 51 stores, including those in Atlanta and California.
Drug Emporium announced the sale agreement just before it filed for bankruptcy protection March 26 in U.S. Bankruptcy Court in Youngstown. Snyder's operates 81 corporate stores and 100 franchises in seven states. It is owned by the Katz Group of Edmonton, Alberta.
Expressed interest: Holmes said Phar-Mor delivered a letter to Drug Emporium officials Monday saying that it is interested in making an offer for the chain. Phar-Mor officials were surprised by comments from Drug Emporium that no one besides Snyder's was interested in acquiring it, he said.
Holmes said Phar-Mor has expressed its interest to Drug Emporium before and wants to renew that interest.
Terry Moore, chief financial officer for Drug Emporium, said it's his company's policy not to comment on "any sort of potential transaction." He would not confirm even having heard from Phar-Mor.
Holmes said Phar-Mor wants to review Drug Emporium's financial records and deal with Snyder's to determine if it is willing to pay more.
Good fit: He said Drug Emporium would be a good fit for Phar-Mor because the companies serve many of the same markets, which would help Phar-Mor operate the stores at lower costs. Phar-Mor, which has 139 stores in 24 states, would be able to negotiate better prices from its suppliers if it added more stores, he said.
Analysts have said Drug Emporium has been hurt by growing competition from other drugstore chains and discount department stores. The company lost $8.7 million in its third quarter, which ended Nov. 25. It lost $28 million in its most recently completed fiscal year.
Drug Emporium's stock price has fallen from about $4 a share a year ago to under $1. After it was delisted from the Nasdaq National Market a few weeks ago, the price has continued to slip and now is about two cents a share.
Phar-Mor's stock also has been trading under $1 a share lately. It was at more than $3 a share a year ago.