Dan River Inc., which has been fighting off a hostile takeover bid by a group headed by investor Carl C. Icahn, yesterday sold 475,000 shares of its treasury common stock to McDonough Co.
McDonough is a wholly owned subsidiary of Hanson Trust PLC, a British holding company whose subsidiaries are active in the textile industry here and in Europe.,
McDonough agreed to pay $18.50 a share for the stock, Dan River said. The Danville, Va., firm said it is holding discussions with the British firm that could lead to its aquiring any and all of the remaining common stock at $18.50 or better.
McDonough thus becomes the white knight Dan River has sought since Icahn began buying its stock.
On Dec. 8, the Icahn group, which already owns 15 percent of Dan River's common, raised its bid for control of the company from $16.50 a share to $18 for up to 2 million shares. Icahn's offer expires on Monday, and he was unavailable last night to say whether he will increase his offering price.
In the past, Icahn has sold out to a company's white knight at a profit after threatening to take control.
Dan River said its board is "firm in the determination that the Icahn group's conditional offer is unfair and not in the best interest of the stockholders or the corporation."
The company said its board authorized the use of $8.8 million of proceeds from the McDonough sale, plus whatever is still left of a $15 million fund previously allocated, to buy more of its own stock as a defense against Icahn.