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Duane Reade Inc. Extends the Closing Date for the Proposed
Acquisition
NEW YORK, June 14 /PRNewswire-FirstCall/ -- Duane Reade Inc. (NYSE:DRD)
announced today that the termination date of its merger agreement with Duane
Reade Shareholders, LLC and Duane Reade Acquisition Corp. has been extended
from June 30, 2004 to July 13, 2004. Duane Reade Shareholders, LLC and Duane
Reade Acquisition Corp. are owned by Oak Hill Capital Partners, L.P. The
record date for determining stockholders of Duane Reade entitled to vote on the
proposed merger is June 3, 2004.
On June 12, 2004, Bear Stearns, the financial advisor to Duane Reade, received
a letter from Duane Reade Shareholders, LLC and Duane Reade Acquisition Corp.
stating that the Investment Committee of Oak Hill Capital Partners, L.P. and
Oak Hill Capital Management Partners, L.P, the parties that had agreed to
provide the equity financing for the merger, were unwilling to waive the
termination of the Equity Commitment Letter beyond its July 1, 2004 expiration
date without a $1.00 reduction in the merger consideration. The letter cited
the union charge of $12.6 million and the related ongoing additional annual
expense of $4.4 million, among the reasons for this position and expressed the
willingness of Duane Reade Shareholders, LLC and Duane Reade Acquisition Corp.
to have further discussions with Duane Reade's board. The parties are in
discussions concerning this letter and the terms of the transaction.
Founded in 1960, Duane Reade is the largest drug store chain in the
metropolitan New York City area, offering a wide variety of prescription and
over-the-counter drugs, health and beauty care items, cosmetics, greeting
cards, photo supplies and photofinishing. As of March 27, 2004, the Company
operated 243 stores.
Oak Hill Capital is a $1.6 billion private equity fund formed in 1998 for the
purpose of making control investments in operating companies through
acquisitions, build-ups, recapitalizations, restructurings or significant
minority positions. The limited partners of Oak Hill Capital Partners include
a number of institutional and individual investors.
Important Information
In connection with the acquisition of Duane Reade by Duane Reade Acquisition
Corp., Duane Reade Acquisition Corp. and related entities have filed relevant
materials with the Securities and Exchange Commission (the "SEC"), including a
preliminary proxy statement, which was filed on March 19, 2004 and amendment
no. 1 to the preliminary proxy statement, which was filed on May 14, 2004. The
definitive proxy statement will be sent to holders of Duane Reade's common
stock if and when it becomes available. Holders of Duane Reade common stock are
urged to read the preliminary proxy statement, as amended, on file with the
SEC, the definitive proxy statement if and when it becomes available and any
other relevant materials filed by Duane Reade or the Oak Hill entities because
they contain, or will contain, important information. The preliminary proxy
statement and amendment no. 1 to the preliminary proxy statement are available,
and the definitive proxy statement will be available if and when it is filed,
for free (along with any other documents and reports filed by Duane Reade with
the SEC) at the SEC's website, http://www.sec.gov/. In addition, you may
obtain documents filed with the SEC by Duane Reade free of charge by requesting
them in writing from Duane Reade Inc., 440 Ninth Avenue, New York, New York
10001, Attention: Corporate Secretary, or by telephone at (212) 273-5700.
Participant Information
Duane Reade Shareholders, LLC, Duane Reade Holdings, Inc. and Duane Reade
Acquisition Corp. were formed as the acquiring entities at the direction of the
equity sponsors, which currently include Oak Hill Capital Partners, L.P., Oak
Hill Capital Management Partners, L.P. and certain members of Duane Reade's
management. Andrew J. Nathanson and Tyler J. Wolfram are the initial directors
of each newly formed Delaware corporation. These entities and their directors
and officers may be deemed to be participants in the solicitation of proxies in
connection with the proposed transaction. As of the date of this
communication, Mr. Nathanson has an indirect interest (through his
participation in an investment partnership) of less than 1% in the outstanding
shares of the common stock of Duane Reade and none of the other foregoing
participants has any direct or indirect interest, by security holdings or
otherwise, in Duane Reade.
Duane Reade and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from its stockholders in connection
with the proposed transaction. Certain information regarding the participants
and their interest in the solicitation is set forth in the proxy statement for
Duane Reade's 2003 annual meeting of stockholders filed with the SEC on April
10, 2003 and the Form 4s filed by Duane Reade's directors and executive
officers since April 10, 2003. Stockholders may obtain additional information
regarding the interests of such participants by reading the preliminary proxy
statement and the definitive proxy statement, if and when it becomes available.
This document may contain statements, estimates or projections relating to,
among other things, the acquisition of the Company by Oak Hill that constitute
"forward-looking" statements as defined under U.S. federal securities laws.
Forward-looking statements involve known and unknown risks and uncertainties,
which may cause the Company's actual results in future periods to differ
materially from forecasted or expected results. Those risks include, among
other things, the competitive environment in the drugstore industry in general
and in the Company's specific market area, inflation, changes in costs of goods
and services and economic conditions in general and in the Company's specific
market area. Those and other risks are more fully described in Duane Reade's
reports filed with the SEC from time to time, including its annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You
should not place undue reliance on forward- looking statements, which speak
only as of the date they are made. Except to the extent otherwise required by
federal securities laws, we do not undertake to publicly update or revise any
forward-looking statements.
For: Duane Reade Inc.
Approved By: John Henry
(212) 273-5746
SVP - Chief Financial Officer
Contact: Cara O'Brien/Lila Sharifian
Press: Stephanie Sampiere
(212) 850-5600
Financial Dynamics
DATASOURCE: Duane Reade Inc.
CONTACT: John Henry, SVP - Chief Financial Officer of Duane Reade Inc.,
+1-212-273-5746; or Cara O'Brien or Lila Sharifian, or Press - Stephanie
Sampiere, +1-212-850-5600, all of Financial Dynamics, for Duane Reade Inc.
Web site: http://www.duanereade.com/