Revco/Big B confidentiality agreement includes stay on poison pill suit.

BIG B PUTS POISON PILL ON HOLD, ENTERS REVCO CONFIDENTIALITY AGREEMENT to provide Revco with confidential information pertaining to its proposed acquisition of Big B, Twinsburg, Ohio-based Revco announced Oct. 4. The agreement includes a stay on the litigation regarding Big B's "poison pill" shareholder rights plan that would activate when an acquiring company attempts to purchase 10% or more of Big B "without prior approval of the Big B board of directors."

The poison pill, which was proposed Sept. 23, would have allowed holders of Big B common stock "to acquire at a discount shares of Big B common stock or, in certain circumstances, shares of the acquiring person."

Revco had filed a suit against Big B in Birmingham, Ala. district court Sept. 30 after the chain's proposed Big B acquisition was blocked by the creation of the poison pill plan. Revco argued that plan "illegally interferes with the right's of Big B shareholders."

Big B's "proposed form of agreement would require us to give up all rights as a shareholder to challenge the validity of your poison pill," Revco President and CEO Dwayne Hoven said in a Sept. 27 letter to Big B Chairman and CEO Anthony Bruno. In addition, the proposed agreement would "prohibit us from soliciting your shareholders to determine whether they wish to eliminate your poison pill in order to accept our offer or any other offer at least until Jan. 31, 1997."

In exchange for a stay on the poison pill plan, Revco has agreed to "not engage in a proxy solicitation or take certain other actions to acquire control of Big B other than a cash tender offer" of $15 per share for all outstanding Big B common stock until Nov. 30.

Revco has extended the deadline for its $15 cash tender offer for Big B until Oct. 18 from Oct. 7. As of Oct. 3, 53,300 shares of Big B's common stock had been tendered. The Federal Trade Commission has not objected to the Big B acquisition; the Hart-Scott-Rodino waiting period ended Sept. 25.

Explaining its rejection of Revco's offer, Birmingham, Ala.-based Big B said its board "concluded that the interest of Big B's shareholders would best be served if Big B were to actively explore alternatives to maximizing shareholder value." Big B is hoping to attract a better offer than the $15 per share tendered by Revco ("The Rose Sheet" Sept. 16, p. 9).

Other Big B suitors have materialized. The company "has already received inquiries from other interested parties" and will "provide confidential information about the company to interested parties who agree to enter into confidentiality agreements in a form acceptable to Big B." CVS and Rite Aid have been named as possible contenders.

"Although the board has made no decision to sell the company, the board will give careful consideration to any acquisition proposal that appropriately reflects Big B's intrinsic value," Big B said.