A New York brokerage firm has added to the confusion surrounding Allied Stores Corp.'s attempt to buy Garfinckel, Brooks Brothers, Miller and Rhoads Inc. by purchasing 9.3 percent of the Washington firm's common stock.
Seemala Corp. said yesterday in papers filed with the Securities and Exchange Commission that it purchased the Garfinckel stock but company officials refused to give a reason. Industry sources said Seemala, formed earlier this year by New York financier Ivan Boesky, is a risk arbitrage firm, meaning it speculates on stock prices and invests in stocks thought to be undervalued or in the midst of a takeover that would later bid up the stock prices.
The purchase of the stock for arbitrage would throw open a large chunk of stock to the highest bidder: Garfinckel, Allied or someone else.
Gary Gould, a Seemala vice president, said yesterday the firm is a registered broker-dealer. He said he "didn't care to disclose" the reason for the stock purchase or whether the firm plans to buy more.
According to the SEC, Seemala purchased 409,700 shares of Garfinckel common stock for $20.94 million on the open market between Aug. 14 and Aug. 26. A public relations spokesman for Garfinckel said the company had no comment on the Seemala purchase.
Garfinckel officials recently rejected a bid by Allied Stores Corp. to buy for $48 a share any and all Garfinckel stock. The $48 bid was more than three times what the stock sold for about a year ago. But the stock "recently has been selling in the low 50s" and it "got to $54" yesterday, according to industry analyst Edmund A. Reynolds Jr. of Davenport & Co.
The emergence of Seemala in the Garfinckel scenario probably will cause Allied to raise its bid to acquire the stock purchased by Seemala, Reynolds said.
"It is getting complicated," Reynolds admitted. "It's all in a never, never land."
The directors of Garfinckel, Brooks Brothers, which also includes Miller and Rhoads and Miller and Harzfield's department stores and Ann Taylor and Catherine's Stout Shoppes women's clothing stores, rejected Allied's bid on Aug. 15 as inadequate and not in the company's best interest.
The firm began searching for another company with which to merge or to which it could sell some of its divisions to ward off the deal with the large New York merchandising company. To stock analysts such a buyer is called a white knight, but analysts said yesterday Seemala was not it.