Washington's Haft family yesterday formally launched its takeover bid for Stop & Shop Cos. Inc., offering shareholders a total of $860 million in cash to buy the nation's ninth-largest supermarket chain.
In documents filed with the Securities and Exchange Commission, the Hafts said that if successful with their hostile, $31-per-share bid, they plan to keep the Boston-based company intact and not sell either of the chain's chief operations: the supermarket chain or Bradlees department stores.
The Hafts, who control Dart Group Corp., Crown Books Corp. and Trak Auto Corp., also said they would launch a proxy fight unless Stop & Shop waived its rights to several antitakeover provisions allowed under Massachusetts law.
Neither Herbert nor Robert Haft was available for comment yesterday.
The bid represents an increase of $1 a share over a merger proposal the Hafts made to Stop & Shop two weeks ago in a letter to the company's board. Stop & Shop stock yesterday rose $2.75, to $33.62 1/2, on the New York Stock Exchange, indicating that professional stock traders believe the price could go higher.
Stop & Shop officials said yesterday that they would discuss the Hafts' latest offer at a board meeting on Feb. 11, and urged shareholders "to take no immediate action" on the bid.
Last week, the company's board rejected the initial $30-a-share proposal, saying it was "in the best interest of the company and its stockholders to remain independent." At the same time, the company said it had appointed a special committee of outside directors to review "methods of protecting shareholder values."
The new offer encountered skepticism on Wall Street, where financial analysts predicted that Stop & Shop officials would continue to resist a takeover by the Hafts.
"The odds of Stop & Shop agreeing to a merger are between slim and none," said Harry Wells, a financial analyst with Adams, Harkness & Hill Inc. "I'm sure the company will endeavor to find another buyer -- be it another company or themselves."
"I don't think management will let it go, because they have been affiliated with the company for over 60 years," said Harry Mortner, an analyst with Cyrus J. Lawrence Inc.
Among other things, analysts noted that the company's chief financial adviser, Peter J. Solomon, vice chairman of Shearson Lehman Bros. Inc., is also a director of Stop & Shop and a first cousin of the company's president, Carol R. Goldberg, whose family founded the company. At the time of Stop & Shop's most recent proxy statement, last April, Solomon owned 1.4 percent of the company's stock.
The bid for Stop & Shop represents the Hafts' fourth attempt to take over a major retailer in recent years. The Hafts have tried to buy a variety of chains, including Safeway Stores Inc., Supermarkets General Corp. and Dayton-Hudson Corp. The Hafts have been thwarted in all of those cases, but they have managed to reap substantial profits in almost all of their bids through gains in stock trading.
The Hafts have bought a 2.7 percent stake in Stop & Shop -- or 738,200 shares -- for an average of $20 a share, according to the document filed with the SEC yesterday.
The SEC filing said Dart Group and its affiliates will supply about $200 million of the funds needed for the offer. The rest of the money will be obtained from senior bank loans and the private placement of senior subordinated securities.
Dart's financial adviser, Paine Webber Inc., said it was "highly confident" that it could arrange the bank financing and private placement of securities, although it noted that no such financing has yet been obtained.
Dart attached several conditions to its bid, including the requirement that Stop & Shop redeem its "poison pill" rights plan that gives stockholders the right to buy shares of a surviving company after a takeover at half their value.
Additionally, Dart's bid was contingent on Stop & Shop's board waiving its ability to take advantage of a Massachusetts antitakeover law that requires 80 percent of outstanding stockholders to approve a takeover. If that provision is waived, only 66 percent of the outstanding stock would be needed to approve a merger. Under Massachusetts law, companies can choose what state-allowed antitakeover provisions they want to adopt.
Dart also asked Stop & Shop to waive another provision in the state law that bars an acquirer from voting shares if it has control of 20 percent or more of a company's stock.
If these conditions are not met, Dart said it would ask for a special stockholders meeting "for the purposes of removing the company's entire board of directors" and naming Dart officials in their place.