Washington's Haft family yesterday increased its hostile takeover bid for Stop & Shop Cos. Inc. to more than $1 billion.
The Hafts said they were raising their bid to $37 a share from $31 subject to the same conditions as their initial bid. Stop & Shop stock rose 12 1/2 cents yesterday to $34.12 1/2; trading closed before the Hafts made their new bid.
The Hafts' earlier offer, which was made Feb. 1 and was worth $860 million, was contingent on Stop & Shop management removing a "poison pill" plan that gives stockholders the right to buy shares of any surviving company. In addition, the Hafts demanded that the Stop & Shop board waive its rights under the Massachusetts antitakeover law, which requires that 80 percent of the outstanding shareholders approve a takeover.
In a separate development yesterday, union sources said the United Food and Commercial Workers, which represents 35,000 Stop & Shop employees, was willing to make major contract concessions in exchange for an equity position in Stop & Shop in an effort to block the Haft takeover.
Union leaders met with the Stop & Shop board yesterday in Boston. It was unclear whether the union made its concessions offer then. "We are trying to work with the company," the union source said.
Concessions from the union could make it easier for Stop & Shop -- which owns a chain of grocery stores in New England and the Bradlees department store chain -- to evade the Hafts' bid by taking the company private through a leveraged buyout. Concessions from the union would reduce costs and allow Stop & Shop management to borrow more money to pay for such a buyout, analysts say.
UFCW President William Wynn has pledged "to leave no stone unturned and no source of financial leverage untapped in our efforts to protect the jobs of Stop & Shop and Bradlees workers."
UFCW officials have been pressing state legislatures in Maryland, Massachusetts and elsewhere to approve protective legislation for workers who might lose their jobs as a result of the takeover attempt -- although analysts have said the biggest risk to workers might be Stop & Shop's defensive actions rather than a Haft takeover.
A spokeswoman for Stop & Shop said the union leaders "voiced their concern" about the Hafts' bid during the company's one-hour board meeting yesterday, but she would not comment on the details of the meeting.
She said that prior to the meeting, the union had been looking for a change in its contract language regarding changes in the retailing company's ownership. The company declined to agree to such a change, which basically would restructure the contract to impose undesirable contract terms on any new owner, she said.
Prior to the meeting with the company board, national union leaders from Washington met with local union leaders representing Stop & Shop and Bradlee employees.
Tom McNutt, president of Local 400, which represents about 4,000 Bradlee employees in Maryland and Virginia, was among those at the meeting.
The meeting was to brief the local leaders on the various options being considered for presentation to the board. Sources said the union has hired a consultant to help it devise a strategy for dealing with the takeover bid.
The Hafts, whose holdings include Dart Group Corp., Crown Books Corp. and Trak Auto Corp., were not available for comment yesterday.
The Hafts made their $860 million cash bid for Stop & Shop Feb. 1. In documents filed with the Securities and Exchange Commission at the time, the Hafts said they planned to keep the company intact.
The initial offer drew immediate skepticism on Wall Street, with analysts predicting that Stop & Shop would either try to find another buyer for the company or the management would attempt a leveraged buyout. The bid for Stop & Shop is the Hafts' fourth effort to take over a major retailer in recent years. All the previous efforts have failed, but the family has usually come away with tens of millions of dollars in profit on stock holdings.
The Hafts own 2.7 percent of Stop & Shop stock, for which they paid an average of $20 a share, according to their filing with the SEC. There was no indication yesterday that the Hafts had increased their stake in Stop & Shop.