Duane Reade

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amended its $17-a-share buyout agreement with subsidiaries of Oak Hill Capital Partners to reflect a price of $16.50 a share and extended the termination date for the merger until Aug. 18.

Oak Hill Capital had indicated on June 12 that it was not prepared to extend the equity commitment to take New York-based Duane Reade private unless there was a reduction in the per-share purchase price by $1.

Meanwhile, as part of the revised terms of the transaction, Duane Reade and its financial adviser, Bear Stearns, are allowed to seek competing proposals.

Shares of Duane Reade were bid higher in Monday morning trading, lately up 85 cents, or 5.5%, at $16.28 on the

New York Stock Exchange


The merger agreement was also amended to modify and/or eliminate certain closing conditions to make the merger more likely.

In addition, Oak Hill Capital provided a renewed equity financing commitment, and the debt financing sources also provided a new commitment, Duane Reade said.

Just last week, Duane Reade had extended the deadline of the merger agreement to July 13 from June 30. Bear Stearns had received a letter on June 12 from the two subsidiaries of Oak Hill Capital, Duane Reade Shareholders LLC and Duane Reade Acquisition Corp., which said Oak Hill Capital was unwilling to waive the termination of the equity commitment letter without a $1 reduction in the merger amount, Duane Reade said.

The letter cited a charge against Duane Reade's earnings of $12.6 million from last year and related ongoing additional annual expenses of $4.4 million. The $12.6 million charge, which was announced March 11, represents an estimate of the contributions not paid to various union benefit funds. As a result of the charge, Duane Reade had restated its fourth-quarter and full-year 2003 earnings.

Duane Reade and Oak Hill Capital are currently in discussions concerning the terms of the merger, which, when announced in December 2003, represented about $415 million in cash.

A Duane Reade shareholder meeting will take place July 26.