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    Marsh Gets Second Acquisition Bid

    Supermarket/c-store chain announces receipt of letters concerning possible competing proposal.

    INDIANAPOLIS -- Nearly a month after signing a definitive agreement to be acquired by MSH Supermarkets Holding Corp. (MSH), an affiliate of Sun Capital Partners Inc., Marsh Supermarkets Inc., has received an unsolicited letter, dated May 22, from Drawbridge Special Opportunities Advisors LLC and Cardinal Paragon, Inc. requesting that Marsh consent to Drawbridge/Cardinal making a proposal to acquire Marsh for $13.625 per share in cash, subject to completion of due diligence, and otherwise on substantially the same terms as the previously announced deal with MSH.

    Marsh operates 69 Marsh supermarkets, 154 Village Pantry convenience stores, 38 LoBill Foods stores, eight O'Malia Food Markets, and two Arthur's Fresh Market stores in Indiana, Illinois and western Ohio.

    Attached to the May 22 letter from Drawbridge/Cardinal is the form of merger agreement that Drawbridge and Cardinal stated they would be prepared to execute immediately following Marsh’s consent to their making their proposal to acquire the company for $13.625 per share and a few days for Drawbridge/Cardinal to review and discuss with Marsh’s management the non-public schedules to the merger agreement with MSH.

    On May 2, 2006, Marsh signed a definitive merger agreement to be acquired by MSH in an all cash transaction for $11.125 per share, and the board of directors determined to recommend that the company's shareholders approve the merger with MSH. The company's board of directors has made no determination to change its recommendation in favor of the MSH merger agreement at this time.

    Cardinal, like other participants in the strategic alternative process conducted by the Company, executed a confidentiality agreement containing an agreement not to make an offer to acquire Marsh without Marsh's consent. Marsh forwarded the May 22 letter (as well as two other letters it previously received from Drawbridge/Cardinal) to MSH and requested that MSH consent to the company granting Drawbridge/Cardinal's request. On May 26, Marsh received a letter from MSH in which MSH indicated its willingness, subject to certain terms, to consent to Marsh granting Drawbridge/Cardinal's request. Those terms included:

    • granting Drawbridge/Cardinal three days to execute a definitive merger agreement with Marsh;

    • requiring that any definitive agreement entered into between Drawbridge/Cardinal and Marsh expressly waive all standstill agreements with all parties and that Drawbridge/Cardinal forego any breakup fee other than a reimbursement for the breakup fee paid to MSH; and

    • the merger agreement with MSH be amended to require the company to reimburse MSH for transaction expenses as well as the breakup fee in the event the merger agreement is terminated.

    Marsh has rejected these conditions in view of the existing protection afforded MSH under the provisions of the merger agreement regarding competing proposals, including the $10 million breakup fee. Moreover, even if Marsh were to accept those terms, there is no assurance that Drawbridge/Cardinal would make an offer under those conditions.

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