NEW YORK, June 18 (Reuters) - Discount chain Kmart Corp. could be a takeover
target for a grocery store chain following Wal-Mart Stores Inc.'s $10.8 billion deal to
buy Britain's ASDA Group, Business Week said in its Inside Wall Street column.
A New York money manager, who was not identified, told the magazine that Kmart,
which has 2,000 stores and is increasing its presence in food retailing with its Big K
stores, could get $30 a share in a buyout. Kmart, which had $33.7 billion of sales the
previous fiscal year, closed at 15-5/16 on Thursday.
Merrill Lynch analyst Daniel Barry believes "a partnership with a supermarket chain
continues to be a possibility," the magazine said. He figures the stock is worth $28 a
share because of the turnaround of its operations with nearly all of its stores converted
to the Big K format.
The unnamed money manager told the magazine that Kmart Chief Executive Floyd
Hall may be looking to please shareholders with a buyout deal.
The magazine said Safeway Inc. (Nyse:SWY) and Kroger Co. (Nyse:KR) are seen as
potential buyers under this scenario.
Safeway, which had $24.5 billion in 1998 sales, and Kmart were not immediately
available for comment.
The magazine noted that Kroger, which recently bought Fred Meyer, may not be ready
for another large acquisition.
Quote for referenced ticker symbols: SWY, KR, KM
© 1999, Reuters
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