Gamble-Skogmo Inc. paid $29 a share for the block of Garfinckel, Brooks Brothers. Miller & Rhoads stock it purchased from the Joseph R. Harris family, a report to the Securities and Exchange Commission revealed yesterday.
The premium price paid for the Harris shares, which previously had not been made public, was $3 to $11 per share more than Gamble-Skogmo paid for Garfinckel stock purchased on the open market.
Gamble's report to the SEC also disclosed that the Minneapolis retailer plans to buy more Garfinckel stock, increasing its holding to at least 20 percent of the Washington firm.
As of Sept. 8, Gamble-Skogmo reported it owned about 13 percent of Garfinckel's common stock and had invested $16.97 million in the shares.
Most of the stock - 466,575 shares - was bought from 30 members of the Harris family for $13.53 million in cash and notes.
Gamble Skogmo began buying Garfinckel shares on the open market on Aug. 2, when the stock was trading at about $18.25, the report shows. By Sept. 8, it had purchased 141,000 shares at prices ranging up to $25.75.
"Gamble's present objective is to increase its equity position to approximately 20 percent of (Garfinckel's shares," the company reported, confirming speculation by Garfinckel officials. When one company owns 20 percent or more of another, it can include that share of profits in its own earnings report. If the ownership is less than 20 percent, only dividends paid on the stock can be counted as income.
Gamble Skogmo said it "presently intends to attempt to achieve this objective through the purchase of shares of the common stock on the open market and may also acquire other shares . . . in privately negotiated transactions."
"Gamble does not have any present intention of seeking majority ownership of (Garfinckel) through a tender offer or otherwise," the company reported.
Gamble Skogmo insisted it has no plans to merge with Garfinckel or to seek any change in Garfinckel's board of directors.
Garfinckel has sued Gamble Skogmo in federal court in Delaware, where Gamble Skogmo is incorporated, in an attempt to block a takeover or merger. Garfinckel charges the combination would violate anti-trust laws by limiting retail competition.
Gamble's plan to try to buy more Garfinckel stock and the $29 price paid for the Harris family shares probably will tend to push up the price of Garfinckel stock. Yesterday - before the new facts were known - the stock closed at $24.75, down 3/8 on a volume of 6,200 shares on the New York Stock Exchange.
Provisions in the sale agreement with the Harris family members, however, may tend to limit increases.
One provision is that if Gamble buys any block of 50,000 shares or more within three months at a price above $29, Gamble also will give that higher price to the Harris sellers. Another is that if Gamble merges with Garfinckel within 18 months by purchasing stock at a price above $29, Harris sellers will get that price as well.
A third provision is that if Gamble sells its Garfinckel shares within six months at a price above $31, one-third of the profits above that price will go back to the Harris sellers.
The protections for the sellers are part of a complex deal worked out by Oppenheimer & Co., a New York investment banking firm, which earned a one percent commission negotiating the $13.5 million deal.