Suitor Rejects Lucky’s Bid for Confidentiality Pact

WASHINGTON — American Stores Co. has rejected Lucky Stores Inc.’s latest proposal for a confidentiality agreement because the conditions Lucky seeks to impose would arbitrarily freeze the bidding process and clear the way for a leveraged buyout arrangement with Gibbons, Green, van Amerongen, according to a filing with the Securities and Exchange Commission.

In a letter dated May 3, American’s attorneys said Lucky’s proposal--contained in a letter from Lucky’s attorneys dated May 2--would allow the Dublin, Calif., supermarket chain to “shop” any new bid made by American without giving American a chance to top another bid.

Lucky’s latest proposal to provide American with non-public information--even after it has agreed to a leveraged buyout with Gibbons Green--requires American to raise its current $60-a-share tender offer within five days of the date of the agreement or terminate its takeover bid altogether.

The agreement would also prevent American from making another bid if Lucky’s board of directors rejects its sweetened offer in favor of its $61-a-share agreement with Gibbons Green, according to the filing.

In its response to Lucky’s latest proposal, American’s attorney said Lucky has a fiduciary duty to give American immediate access to its non-public information so that shareholders may benefit from a potentially higher bid.

“We can only assume this proposal was designed intentionally so that it would be unacceptable to American Stores,” he said in the letter.