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Exhibit 8.1
DRAFT
Writer's Direct Dial: (212) 225-2350
[Date]
Fred Meyer, Inc.
3800 SE 22nd Avenue
Portland, Oregon 97202
Ladies and Gentlemen:
We have acted as counsel to Fred Meyer, Inc. ("Fred Meyer"), a Delaware
corporation in connection with the transactions contemplated by the Agreement
and Plan of Merger dated as of October 18, 1998 (the"Agreement") by and among
The Kroger Co., an Ohio corporation ("Kroger"), Jobsite Holdings, Inc., a
Delaware corporation ("Merger Sub") and Fred Meyer. At your request, in
connection with the filing of the Registration Statement on Form S-4 filed with
the Securities and Exchange Commission, as amended through the date hereof, in
connection with the Merger (the "Registration Statement"), we are rendering our
opinion with regard to certain United States federal income tax consequences of
the Merger. All capitalized items used but not defined herein shall have the
same meanings as in the Agreement.
In arriving at the opinions expressed below, we have examined and relied
upon the accuracy and completeness of the facts, information, covenants and
representations contained in originals, or copies certified or otherwise
identified to our satisfaction, of the Agreement, the Registration Statement and
the Proxy Statement/Prospectus included therein(together, the "Proxy
Statement").
Without limiting the generality of the foregoing, in arriving at the
opinions expressed below, we have also examined and relied, without independent
verification of the statements contained therein, on certificates from each of
Fred Meyer and Kroger regarding certain tax matters, and we have assumed the
accuracy of the representations and statements made in each of the foregoing.
In arriving at the opinions expressed below, we have assumed, without
making any independent investigation, that all such documents as furnished to us
are complete and authentic, that the signatures on all documents are genuine,
and that all such documents have been, or in the case of drafts, will be, duly
authorized, executed and delivered. We have further assumed that
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the transactions will be consummated and the parties will act in accordance with
these documents.
Based on and subject to the foregoing, the opinion contained in the Proxy
Statement under the caption "THE MERGER -- U.S. Federal Income Tax Consequences
of the Merger," except as otherwise indicated, represents our opinion as to the
material U.S. federal income tax consequences of the Merger under applicable
law.
We hereby consent to the use of our name and the making of statements with
respect to us under the captions "SUMMARY -- Certain U.S. Federal Income Tax
Consequences of the Merger" and "THE MERGER -- Certain U.S. Federal Income Tax
Consequences of the Merger" in the Proxy Statement. In giving this consent, we
do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Sincerely,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By:
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Leslie B. Samuels, a Partner
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DRAFT
FRED MEYER INC.
OFFICER'S CERTIFICATE
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The undersigned officer of Fred Meyer, Inc., in connection with the
opinions to be delivered by Cleary, Gottlieb, Steen & Hamilton and Fried,
Frank, Harris, Shriver & Jacobson (i) pursuant to Sections 7.2(e) and
7.3(e) of the Agreement and Plan of Merger dated as of October 18, 1998 by
and among The Kroger Co. ("Kroger"), Jobsite Holdings, Inc. ("Merger Sub")
and Fred Meyer, Inc. ("Fred Meyer") (the "Agreement") and (ii) concerning
the Joint Proxy Statement/Prospectus contained in the Form S-4 being filed
with the SEC with respect to the Kroger Common Stock to be issued to Fred
Meyer stockholders in the Merger, and recognizing (1) that said law firms
will rely on this Certificate in delivering such opinions, (2) that it will
be necessary to provide a written confirmation of each of the following
representations at the Effective Time or an explanation prior to such time
as to why confirmation is not possible and (3) that the tax opinions may
not accurately describe the consequences of the Merger if any of the
following representations are not accurate in all respects, hereby
certifies that to the extent the following facts and representations relate
to Fred Meyer, such representations are true, complete and correct in all
respects and, to the extent the following representations relate to Kroger
or Merger Sub, the undersigned has no reason to believe such
representations are not true, and further certifies that (unless otherwise
defined herein, capitalized terms shall have the meanings ascribed to them
in the Agreement):
1. The fair market value of the Kroger Common Stock received by each
Fred Meyer stockholder will be approximately equal to the fair market value
of Fred Meyer Common Stock surrendered in the Merger.
2. Following the Merger, Fred Meyer will hold at least 90 percent of
the fair market value of its net assets and at least 70 percent of the fair
market value of its gross assets and at least 90 percent of the fair market
value of Merger Sub's net assets and at least 70 percent of the fair market
value of Merger Sub's gross assets held immediately prior to the Merger.
For purposes of this representation, amounts used by Fred Meyer or Merger
Sub to pay reorganization expenses, and all redemptions and distributions
(except for regular, normal dividends) made by Fred Meyer or Merger Sub
will be included as assets of Fred Meyer or Merger Sub, respectively,
immediately prior to the Merger.
3. In the Merger, shares of Fred Meyer stock representing control of
Fred Meyer, as defined in Section 368(c) of the Internal Revenue Code of
1986, as amended (the "Code"), will be exchanged solely for voting stock of
Kroger. For purposes of the representation, shares of Fred Meyer stock
exchanged for cash or other property originating with Kroger or any person
related to Kroger (within the meaning of Treasury Regulations Section
1.368-1(e)(3)) will be treated as outstanding Fred Meyer stock on the date
of the Merger.
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4. Immediately prior to the Merger, Fred Meyer will be carrying on
Fred Meyer's historic business or using a significant portion of Fred Meyer
historic business assets in a business (within the meaning of Treasury
Regulations Section 1.368-1(d)).
5. Immediately after the Merger, Kroger will be in control of Fred
Meyer within the meaning of Section 368(c) of the Code, and Fred Meyer has
no plan or intention to issue additional shares of its stock that would
result in Kroger losing control of Fred Meyer within the meaning of Section
368(c) of the Code.
6. All of the outstanding stock of Fred Meyer will be exchanged solely
for Kroger Common Stock. Fred Meyer has not redeemed and will not redeem
any of its stock prior to and in connection with the Merger, and no person
related to Fred Meyer within the meaning of Treasury Regulation Section
1.368-1T(e)(2)(ii) has acquired or will acquire Fred Meyer stock for
consideration other than Kroger Common Stock or Fred Meyer stock prior to
and in connection with the Merger. Other than normal and regular dividends,
Fred Meyer has made no distribution to its shareholders prior to and in
connection with the Merger.
7. Fred Meyer will pay its expenses incurred in connection with the
Merger; provided, however, that (i) the filing fees in connection with the
filing of the Form S-4 and the Joint Proxy Statement/Prospectus with the
SEC, (ii) all filing fees in connection with any filings, permits or
approvals required under applicable state securities or "blue sky" laws in
connection with the Merger, (iii) the expenses incurred in connection with
printing and mailing of the Form S-4 and the Joint Proxy
Statement/Prospectus, and (iv) any commitment fee payable in connection
with any planned refinancing or replacement by Kroger of, or any commitment
to obtain the consent of the requisite lenders to consummate the Merger
under, the financing facilities listed as items 1 and 2 on Schedule
3.5(a)(iii) of the Fred Meyer Disclosure Letter and the financing
facilities listed on Schedule 4.5(a) of the Kroger Disclosure Letter shall
be shared equally by Kroger and Fred Meyer.
8. At the time of the Merger, Fred Meyer will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in Fred Meyer that, if
exercised or converted, would affect Kroger's acquisition or retention of
control of Fred Meyer, as defined in Section 368(c) of the Code.
9. Fred Meyer is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
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10. On the date of the Merger, the fair market value of the assets of
Fred Meyer will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
11. Fred Meyer is not under the jurisdiction of a court in a case
under Title 11 of the United States code or a receivership, foreclosure or
similar proceeding in a Federal or State court.
12. None of the compensation received by any stockholder-employee of
Fred Meyer will be separate consideration for, or allocable to, any of such
stockholder-employee's shares of Fred Meyer stock; none of the shares of
Kroger stock received by any stockholder-employee of Fred Meyer pursuant to
the Merger will be separate consideration for, or allocable to, any
employment agreement except for Kroger stock issued in satisfaction of Fred
Meyer Options; and the compensation paid to any stockholder-employee of
Fred Meyer will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length for similar
services.
13. There is no intercorporate indebtedness existing between Kroger
and Fred Meyer or between Merger Sub and Fred Meyer that was issued,
acquired or will be settled at a discount.
14. The Merger will be consummated in compliance with the terms of the
Agreement.
15. Each of the representations made by Fred Meyer and facts
concerning Fred Meyer set forth in the Agreement, the Form S-4 and the
Joint Proxy Statement/Prospectus are true, accurate, and complete in all
material respects as of the date of this letter.
16. Fred Meyer's corporate business reasons for consummating the
Merger are set forth on pages ___ of the Joint Proxy Statement/Prospectus.
18. Fred Meyer has not distributed the stock of a "controlled
corporation" (as defined in Section 355(a) of the Code) in a transaction
subject to Section 355 of the Code within the past two years.
FRED MEYER INC.
Dated: By:
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[NAME]
[Title]
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