MINNEAPOLIS, JUNE 25 -- Gov. Rudy Perpich signed emergency legislation today to help Dayton Hudson Corp. ward off a takeover threat by Washington's Haft family.
Perpich signed the measure, which gives Minnesota one of the toughest antitakeover laws in the country, just seven days after the company asked the state to tighten its takeover laws. Earlier today, Minnesota's House of Representatives had voted 120-5 to adopt legislation that would make it harder for the Hafts or other investors to take over Dayton Hudson or any other Minnesota company.
Minutes later, the state Senate unanimously passed the measure and sent it to Perpich.
The lawmakers moved quickly after State Senate Majority Leader Roger Moe said the situation confronting Dayton Hudson probably is the most serious since the legislature was called to its first special session in 1862 to deal with an Indian uprising.
Dayton Hudson is the nation's sixth-largest department store operator as well as Minnesota's largest company in terms of revenue -- $9.3 billion for 1986 -- and one of its largest employers with more than 34,000 employes in the state.
But more than that, commented one Minnesotan, Dayton Hudson "is like God and motherhood here."
It is the leading department store, known for its service as well as retailing trends.
"It's not one week of political muscle but rather 84 years of good service," Moe said in explaining why the state legislature was moving so fast to adopt the measure sought by Dayton Hudson.
"People like them here -- they are to retailing in this state what the Redskins are to sports in Washington," Moe said.
Despite its reputation, Dayton Hudson took no chances in the legislature. It hired the five top lobbying firms in the state to push for its bill, turned out its employes in a massive letter-writing campaign, called in chits from Minnesota charities it has supported for years, and even benefitted from the Santa Bear Christmas promotion it launched a year before these popular stuffed animals were offered by other stores.
"It's very difficult to defeat Santa Bear," said Rep. Gil Gutknecht, one of the five lawmakers who opposed the bill.
The legislature took up the measure today, despite Wednesday's rumors on Wall Street that the Hafts had sold their stake in Dayton Hudson.
Dayton Hudson Chairman Kenneth Macke has said the Hafts contacted the company last week to tell officials they wanted to buy the company. "We said we were not interested; they countered that they remain interested."
As its chief defense, Dayton Hudson urged the state to make it more difficult for corporate raiders to buy a Minnesota company. Among other things, the legislation would bar an unwanted acquirer from selling any assets of the company it buys for at least five years after the takeover.
Fear that the nationwide Minnesota-based retail empire might be broken up was one of the big motivations for legislature's actions. What's more, Minnesotans note that the company is one of the most charitable in the country, donating 5 percent of its pretax income to charities. That practice, begun 40 years ago, has resulted in $120 million in charitable donations over the years.
For Minnesota, that meant $10 million in donations last year alone, noted House speaker Robert Vanasek.
Dayton Hudson took advantage of that vault of goodwill by recruiting the United Way and several charitable and arts groups to lobby for the antitakeover bill.
Dayton Hudson was also helped by the fact that Dart was the takeover bidder. Dart has made takeover bids for other companies, including Safeway Stores Inc. and Supermarkets General Corp. Although the Hafts failed to acquire the companies, they pressured Safeway and Supermarkets General into accepting other buyout offers, which in the case of Safeway led to the closing of divisions and the laying off of thousands of employes.
"If it was another bidder, it wouldn't have been as easy," noted Tony Ventura, a broker for Wessel, Arnold & Henderson. "Dart's been painted in a very black light." Nonetheless, state legislators do admit they find it ironic that Dayton Hudson -- an avowed free-market proponent -- is now running to the government to help fend off an unwanted takeover.
Three years ago, when Minnesota passed a less stringent antitakeover law, Dayton Hudson was asked to help support the bill but declined.
"It is ironic, I must confess," to find Dayton Hudson now lobbying hard for tighter legislation now, said Moe, who was the author of the antitakeover legislation in 1984. "I remember it, but times change. They need help now," he said.
Under the legislation that was approved by House and Senate committees late Wednesday night, any company that had at least 10 percent of its shareholders in Minnesota is subject to the antitakeover laws -- regardless of whether it is incorporated or based in the state.
The provision barring an acquirer from selling the company's assets for at least five years after the takeover would make it harder for corporate raiders to finance any acquisition because they could not use the company's assets to pay off some of the debt.
The measure also puts some added burdens on corporate managements, barring them from granting themselves favorable severance pay -- known as "golden parachutes" -- during a takeover battle. However, companies would be able to adopt golden parachutes when a takeover fight was not in progress.
Companies would also be barred from paying "greenmail" -- a payment made to buy back stock from a bidder to get rid of the takeover threat -- for more than 5 percent of the company's stock.