Marriott Corp. yesterday bypassed the Saga Corp. board of directors and went directly to the California company's shareholders, offering $34 a share in cash for all of Saga's outstanding stock in an unsolicited takeover attempt.
The offer, valued at about $435 million for the 12.8 million shares of the restaurant and food services company, is the same price that Marriott offered the Saga board on May 8. Saga's board allowed the May 12 deadline set by Marriott to pass, saying that it needed more time.
Market analysts have said that the Bethesda corporation's contract food-service operations would be complemented by acquiring Saga. With $1.3 billion in annual sales, Saga is a major provider of food services to colleges, corporations and hospitals.
Last year, Marriott's food-service businesses to airlines and corporations represented 37 percent of the company's total sales of more than $4 billion.
Saga's board announced yesterday that it expects to meet "in the near future to consider the Marriott offer and other alternatives available to the company."
Marriott spokesmen had no comment on the company's latest offer for Saga, which expires at midnight June 16.
"We might conclude that Saga's playing it cool and looking for a better offer," said Eliot Benson, vice president and research director of Ferris & Co. "The implication is that a better offer might be forthcoming from Marriott or someone else might enter the bidding."
However, while analysts last week were virtually unanimous in their views that the Marriott offer for Saga was too low, there were varying opinions yesterday. Some said that Marriott's offer would begin to look pretty good if no one else comes in with a better one.
"Marriott is, in effect, taking out an advertisement by going to the shareholders," said Joseph Doyle, of Smith, Barney. "Their strategy is to hope that no one else will come in and buy Saga for a higher price."
Still, he said he thought Marriott had less than a 50-50 chance of getting Saga for $34 a share.
"I find it difficult to believe they will get very much stock when their offer is more than three points below the market," said Benson.
However, Benson said, there's the matter of value. "Another two or three points and Saga may not be attractive to Marriott."
"Investors have bid up the price on the assumption that a better deal will come along," said analyst Sarah Sheckler of Duff & Phelps. "We haven't seen any competition and I think it's a fair market price."
Saga's stock has jumped from $29.50 a share on May 8, just before Marriott made its original offer, to $37.37 1/2 at the close of trading on the New York Stock Exchange yesterday.
Saga Corp.'s 1985 profits were $22.5 million, down 34 percent from 1984, a fact the company attributed to high marketing, promotion and expansion expenses.
Marriott's successful acquisition of Saga would make it the Washington area's largest company, pushing it above top-ranked Martin Marietta Corp., an aerospace company.
In addition to its food-service operations, Saga Corp. also owns and operates restaurants.