1
December 4, 1995
To Our Stockholders:
On behalf of the Board of Directors of Revco D.S., Inc. (the "Company"), I
wish to inform you that the Company has entered into an Agreement and Plan of
Merger dated as of November 29, 1995 (the "Merger Agreement") with Rite Aid
Corporation ("Parent") and Ocean Acquisition Corporation, its wholly owned
subsidiary (the "Purchaser"), pursuant to which the Purchaser has today
commenced a cash tender offer (the "Offer") to purchase such number of shares of
common stock, par value $.01 per share (the "Shares"), of the Company as equals
50.1% of the issued and outstanding Shares at $27.50 per Share.
Under the Merger Agreement, the Offer will be followed by a merger (the
"Merger") in which any remaining Shares will be converted into the right to
receive either: (i) a number of shares of common stock of Parent ("Parent Common
Stock") to be determined based on the formula set forth in the Merger Agreement,
subject to a collar which provides that the exchange ratio shall not be greater
than 1.12500 nor less than .91666 shares of Parent Common Stock per Share; or
(ii) in the event that the stockholders of Parent do not approve the issuance of
Parent Common Stock, a combination of Parent Common Stock and cash based on a
formula set forth in the Merger Agreement, whereby the number of shares of
Parent Common Stock in the aggregate to be issued in the Merger will not exceed
19.9% of the shares of Parent Common Stock outstanding immediately prior to the
Merger. As described in the attached Schedule 14D-9 relating to the Offer, the
number of shares of Parent Common Stock to be received for each Share in the
Merger will increase to the extent the average value of Parent Common Stock is
greater than $27.50 per share during a pricing period and will decrease if the
average value of Parent Common Stock is less than $27.50 per share during such
pricing period.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE OFFER AND THE MERGER ARE
FAIR TO AND IN THE BEST INTEREST OF THE COMPANY'S STOCKHOLDERS AND HAS APPROVED
THE OFFER AND THE MERGER. THE BOARD OF DIRECTORS RECOMMENDS THAT ALL
STOCKHOLDERS WHO DESIRE TO RECEIVE CASH FOR THEIR SHARES ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached Schedule 14D-9 that is
being filed today with the Securities and Exchange Commission, including, among
other things, the opinion dated November 29, 1995 of Xxxxxx Xxxxxxx & Co.
Incorporated, that the consideration to be received by the holders of the Shares
pursuant to the Offer and the Merger, taken together, is fair from a financial
point of view to such holders.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase dated December 4, 1995 of the Purchaser,
together with related materials, including a Letter of Transmittal, to be used
for tendering your Shares pursuant to the Offer. These documents state the terms
and conditions of the Offer and provide instructions as to how to tender your
Shares. We urge you to read these documents carefully in making your decision
with respect to tendering your Shares pursuant to the Offer.
On behalf of the Board of Directors,
X. XXXXXX XXXXX
President and Chief Executive
Officer
Revco D.S., Inc., 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxx 00000, 216/425-9811
