Dayton Hudson Corp. yesterday announced that it had rejected the Haft family's $6 billion bid to buy the nation's sixth-largest department store operator.
In a terse announcement, Dayton Hudson said the Hafts' merger proposal was "inadequate and not in the best interests of the corporation and its shareholders, nor in the interests of its employes, customers, communities and other constituencies."
The Hafts, responding within minutes of Dayton Hudson's announcement, said they would continue to try to buy the Minneapolis retailer. "We are dedicated and determined to purchasing the company," said Robert Haft, who -- with his father, Herbert -- runs Dart Group Corp., a Landover holding company.
"We believe Dayton Hudson's directors have an obligation to their shareholders to negotiate with us and not reject our proposal out of hand," Haft said. "We intend to seek a meeting with them immediately to discuss the price and any other terms of the offer."
Haft said there has been no communication between Dayton Hudson and the Hafts since the bid was made Sept. 17. Haft said he found out about yesterday's Dayton Hudson statement when contacted by the press.
Dayton Hudson's announcement did not surprise analysts, who had been predicting that it would turn down the bid.
Trading in Dayton Hudson stock reflected that belief; its price never came close to the Hafts' bid. Yesterday, the stock closed on the New York Stock Exchange at $58.75, up 87 1/2 cents from the day before.
In addition to its department stores, Dayton Hudson owns the Mervyn's and Target discount store chains and Lechmere stores, which sell consumer electronics, housewares and recreational equipment. Earnings last year totaled $310 million on sales of $9.3 billion.
Dayton Hudson faces a class-action lawsuit from its shareholders, who have accused its board of "gross abuse of trust" for trying to prevent the sale of the company. The suit, filed late last week, seeks a court order to force Dayton Hudson to "negotiate in good faith with Dart" or others interested in a takeover bid.
Despite the class-action suit, which Dayton Hudson said was "without merit," the company declined to elaborate on its reasons for turning down the Hafts' bid.
In a two-paragraph announcement, its chairman, Kenneth A. Macke, said: "We believe that Dayton Hudson's shareholders and other constituencies should continue to have the opportunity to fully realize the benefits of the businesses we are operating."
Nonetheless, financial analysts yesterday noted that the class-action suit would have little impact on Dayton Hudson's decision-making. "These suits are very difficult for shareholders to win historically," said Monroe Greenstein of Bear Stearns & Co.
"The ball is now in the Hafts' court," Greenstein added. "They have one of two choices: They can either raise their offer or start an unfriendly tender offer," taking their bid directly to shareholders and bypassing Dayton Hudson's board.
But analysts noted that an unfriendly offer may be difficult to win, especially considering the new antitakeover law enacted by Minnesota's legislature earlier this summer.
The law, passed in an emergency session at Dayton Hudson's request just days after the Hafts first expressed interest in the retailer, makes it harder for a corporate raider to buy a Minnesota company without approval of the board.
Haft said he strongly disagreed with Dayton Hudson's finding that his family's bid was inadequate.
"We believe the price is adequate, as it represents the highest price ever paid for the stock, 26 times the most recent 12-month earnings, over a 50 percent premium from where the stock traded in just the last six months and 2.8 times the accumulated net worth of the company."