Garfinckel, Brooks Brothers, Miller & Rhoads Inc. yesterday made peace with Gamble-Skogmo Inc., ending a bitter takeover fight.
The two companies announced they have agreed to drop all the lawsuits they have filed against each other since Gambles bought 20 percent of Garfinckel's stock last September.
As part of the deal, Gambles promised not to buy any more Garfinckel stock for 10 years and to give Garfinckel the first chance to buy stock if it decides to sell.
Garfinckel gave Gambles the right to "request nomination" of an independent person, not directly affiliated with Gambles to the Garfinckel board of directors. Gambles, however, said it will not immediately exercise that right.
A key element in the settlement assures Gambles' right to use the "equity method of accounting" to report on its investment in Garfinckel. That means Gambles can claim -- for financial reporting purposes only -- its proportionate share of Garfinckel's sales and profits, adding 20 percent of Garfinckel's earnings to its own bottom line.
Settlement of the dispute with Gambles will allow the Washington-based retail conglomerate to shift its attention away from fighting off an unfriendly takeover and back to expanding its retail businesses, said Harold S. Trimmer Jr., secretary of Garfinckel.
Gambles bought into Garfinckel last September by purchasing most of the shares owned by members of the Joseph R. Harris family. The Harrises acquired their Garfinckel stock when the company bought the Joseph R. Harris women's clothing stores.
To prevent Gambles from buying additional stock and eventually gaining control of the company, Garfinckel sued Gambles in federal court in Delaware, charging the stock purchase violated federal securities and antitrust laws.
Gambles responded with its own lawsuit, but as part of yesterday's agreement all those legal actions will be dismissed.
In effect, the statement prevents Gambles from taking over Garfinckel, but assures Gambles it can claim 20 percent of Garfinckel's profits as its own.
Most of the 27-page peace treaty signed by Garfinckel President David R. Waters and Gamble-Skogmo President Wayne E. Matschullat deals with what happens if Gambles decides to sell its stock.
Gambles is required to notify Garfinckel of any plan to sell the stock and to give Garfinckel the right to match any offer for them. If Garfinckel is unwilling or unable to buy the stock, Gambles promises to sell it in small blocks, so no single buyer gets more than 2 per cent.