Lowe's hooks up with Eagle
$1 billion acquisition of hardware retailer to speed Lowe's expansion to West Coast
November 23, 1998: 12:32 a.m. ET
NORTH WILKESBORO, N.C. (Reuters) - Home improvement retailer Lowe's Cos. Inc. said Sunday it will buy Eagle Hardware & Garden Inc. in a stock deal worth about $1 billion.
"This merger allows Lowe's to accelerate our West Coast expansion program and gives us an immediate presence in a number of key metropolitan markets in the West," Bob Tillman, Lowe's chairman and chief executive, said in a statement.
Lowe's said it will add Eagle's 32 stores to the 100 it plans to open in the region over the next three to four years.
The merger, which has been approved by the boards of both companies and is expected to close in the first quarter, is expected to add modestly to Lowe's earnings in fiscal 1999.
Under the terms of the agreement, Lowe's will issue shares to Eagle's shareholders valued at $29 per Eagle share, the company said in a statement.
The number of shares Eagle holders will receive will be determined by dividing $29 by the average of the daily closing price of Lowe's common stock on the New York Stock Exchange in a 10-day trading period ending on the fifth trading day before the close of the transaction.
The shares issued will be no less than 0.64, and no more than 0.8659 shares.
Lowe's stock closed Friday at $39.56. Eagle stock closed at $27.50.
The merger is structured as a tax-free exchange of Lowe's shares for Eagle's shares, and will be accounted for as a pooling of interests.
Richard Takata, Eagle's president and CEO, will oversee the transition efforts and will be president and chief operating officer of Eagle after the acquisition is complete.
Lowe's shares (LOW) closed down 1/16 to 39-9/16 in trading on Friday.
Eagle shares (EAGL) closed up 1-1/4 to 27-1/2.
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