Pamida buys out Place’s chain of stores

ShopKo Stores, Inc. (NYSE: SKO) and P.M. Place Stores Company today announced the signing of a letter of intent for ShopKo to acquire Place, an employee owned company, in a transaction valued at approximately $22 million, including the assumption of $19 million in debt.

P.M. Place Stores Company operates 49 discount stores in Missouri, Iowa, Kansas and Illinois, including a leading retail store in Gallatin. The company overall employs approximately 750 people.

Place headquartered in Bethany, recorded sales of $56.8 million in the fiscal year ended Jan. 31, 2000. Place’s Bethany distribution center is expected to continue operations. Corporate office functions will be consolidated at Pamida’s corporate headquarters in Omaha, Neb.

Pamida, a wholly owned subsidiary of ShopKo Stores, Inc., currently operates 165 stores in small towns and rural communities.

“This acquisition is another significant step in ShopKo’s plan for aggressive growth, at the same time providing the Place’s stores with the larger scale that has become a requirement for survival in retailing,” said ShopKo chairman, president and chief executive officer William Podany. “The Place’s stores are a perfect addition to our small-town Pamida retail format.”

With the acquisition of Place’s, Pamida’s square footage is expected to grow 35.5 percent in the fiscal year ending Feb. 3, 2001. Additionally, ShopKo’s corporate goal of eight to 10 percent square footage growth in 2000 will be surpassed, with growth of 12.5 percent by the end of the year.

“Opportunities remain. We plan to continue to break new ground with the Pamida strategy and solidify our position as the market leader,” Podany said.

The acquisition will be accounted for as a purchase, and is expected to close by early July, 2000, contingent upon regulatory approval and certain other conditions. ShopKo will finance the transaction with cash on hand.

Assuming the transaction closes as anticipated, Place’s store inventories will be liquidated and the stores closed during a brief remodeling period. Pamida expects to reopen the stores under the Pamida name in late September, 2000.

The transaction is not expect to have a material impact on ShopKo’s current fiscal year results, and is expected to be accretive to earnings next fiscal year.

“Employee-owned Place’s Discount Stores is very proud of the retail concept we developed to serve our 49 communities. I would like to thank our employee-shareholders for their vision and investment we made over the past decade,” said Charles M. Place, Place’s president and chief executive officer.

“By leveraging ShopKo’s retailing expertise and success, and Pamida’s small-town retailing brand, Place’s stores will gain new life with the infrastructure and capital resources ShopKo has to offer. Additionally, all three companies have similar values, which should allow for a smooth transition.”

ShopKo Stores, Inc., a Fortune 500 company headquartered in Green Bay, Wis., operates 327 retail stores in 22 states, primarily in the Midwest, Western Mountain and Pacific Northwest regions. Retail operations include 162 specialty discount stores operating under the ShopKo name in mid-sized and larger cities, and 165 Pamida discount stores in smaller, rural communities.

The company also serves the rapidly growing managed health care industry through its subsidiary ProVantage Health Services, Inc. ProVantage is a leading health benefit management company providing health benefits management services, pharmacy mail services, vision benefit management services and health information and clinical support services.

For more information about ShopKo, Pamida or ProVantage, visit the web site at http://www.shopko.com.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to important factors which could cause ShopKo’s actual results to differ materially from those anticipated by the forward-looking statements. These factors include those referenced in ShopKo’s current Annual Report on Form 10-K or as may be described from time to time in ShopKo’s subsequent SEC filings.