FOXMEYER STANDS IN FOR BERGEN AFTER SUCCESSFUL COURTSHIP BY NATIONAL INTERGROUP; STEEL/DISTRIBUTION FIRM PAYING $233 MIL. FOR DRUG WHSLR. ENTRY

National Intergroup will be marrying into the drug whsle. industry after all through the acquisition of FoxMeyer. The steel/distribution concern was left standing at the altar last spring when Bergen Brunswig cancelled a merger agreement. Under a definitive merger agreement announced on Feb. 7, National Intergroup will pay $35 a share in cash for FoxMeyer, or approximately $233 mil. The joint release notes that the FoxMeyer board of directors has unanimously adopted the merger agreement, while the National Intergroup board will meet on Feb. 10 to vote on the merger. National Intergroup is still cash heavy, carrying over $300 mil. in net working capital as of Dec. 31, 1985. The steel company's deep cash reserve, and its commitment to investment in the distribution business, was the key attraction for Bergen when the whslr. began negotiations for a merger in 1984. Bergen's reservations about the overall financial condition of National Intergroup, however, caused the whslr. to back away from the deal last April. With consolidation still a dominant trend in the whsle. drug industry, access to cash to fund acquisitions has become an important element in strategic planning for drug whslr. management. FoxMeyer's ability to attract capital from the public markets may be drying up after three equity offerings since the whslr. went public in July 1983. Commenting on the merger, FoxMeyer Chairman William Tauscher stated: "We at FoxMeyer like the thrust of National Intergroup's future plans and the emphasis they are placing on expansion of their distribution business. We believe our association with National Intergroup will enable FoxMeyer to become the most dynamic drug whslr. in America." Over the past three years, FoxMeyer has set a frantic pace for expansion through acquisition. The whslr. acquired Cincinnati Economy Drug, Lincoln Drug, and TBL pharmacy computer systems in 1983; Yahr Lange and I. L. Lyons in 1984; and McPike and the Ben Franklin franchise operation in 1985 (from Household Internatl.). Since Fiscal 1981, FoxMeyer has grown its whsle. business from $155.8 mil. to sales expected to top $1 bil. in the current fiscal year which ends March 31. National Intergroup is paying a nifty 22 times FoxMeyer's $10.3 mil. net earnings for the 12 months ended Sept. 30 -- the whslr.'s last reported financial period. Even if compared with estimated net earnings for the 12 months ended Dec. 31 based on a continuation of FoxMeyer's first half earnings growth at 40%, National Intergroup's offering price would still be approximately 20 times net. National Intergroup's offer is also generous based on the stock's opening price on Monday, Feb. 3 of 23-5/8 -- representing a near 50% price premium. Tauscher and President Richard Bard, who engineered the whslr.'s rapid expansion program, will receive $8 mil. and $2.1 mil., respectively, from their holdings in the company based on FoxMeyer's 1985 proxy materials. National Intergroup said that FoxMeyer's management team will stay on after the merger. Following its unsuccessful merger attempt with Bergen last year, National Intergroup has taken several radical steps toward transforming its business mix. In October 1985, National acquired Permian Corp., the largest crude oil distribution company in the U.S. with $4.5 bil. in sales in 1985, for $172 mil. National Intergroup continued to restructure with the sale of its First Nationwide savings and loan business to Ford for $400 mil. in December. National Intergroup built up its cash reserves by spinning off its steel business with the sale of Weirton Steel in 1983 and sale of a 50% interest in National Steel to Nippon Kowa in 1984.