Stop & Shop Cos. Inc. yesterday attacked Washington's Haft family in federal court in Boston, alleging that the Hafts' $1 billion takeover bid for the Boston-based retailer was actually an effort to drive up Stop & Shop's stock price for a quick profit -- which the company said echoed the Hafts' previous raids on retailing firms.
"Acting through corporate shells that have for years provided thin cover for their illegal self-dealing and raids on corporate treasuries, defendants are now attempting to deceive and manipulate Stop & Shop ... in search of quick, undeserved and illegal profits," Stop & Shop said in a suit filed in U.S. District Court in Boston.
The suit alleges that the Hafts violated federal securities and antifraud laws in their $1 billion, or $37-a-share, takeover bid for the retail chain by issuing "false, misleading and deceptive" documents to Stop & Shop shareholders, and asks the court to stop the Hafts' attempt to take over the Boston-based company and to award Stop & Shop an unspecified amount in damages.
Robert Haft, who with his father, Herbert, heads Dart Group Corp., late yesterday called the suit "without merit" and "driven by their stated desire to remain independent." In addition to Dart Group, the Hafts also control retailers Trak Auto Corp. and Crown Books Corp.
The Hafts have bought a 2.7 percent stake in Stop & Shop -- more than 730,000 shares -- for an average $20 a share, according to SEC documents. Stop & Shop's stock closed yesterday at $39.62 1/2 a share, up $2.50.
Stop & Shop, which owns the Stop & Shop supermarket and Bradlees department store chains, alleged in its suit that documents the Hafts filed with the Securities and Exchange Commission and sent to shareholders concerning their offer conceal the Hafts' "pattern of conduct designed to place public corporations like Stop & Shop 'in play' so that the defendants can reap immense arbitrage profits."
The suit said the Hafts' documents "portray defendants as engaged in the business of selling books and auto parts and dealing in bankers' acceptances. ... In fact, Dart is operated as an unregistered investment company."
The suit details seven previous attempts by the Hafts to take over retailing companies since 1984, alleging that those attempts were all meant to reap quick profits on the Hafts' investments in the companies by selling the stock to the target company or on the market at a premium. "Defendants have never pursued a single takeover bid to completion," the suit says.
On Thursday, the board of Stop & Shop unanimously rejected the takeover bid after a day-long meeting. The company said its options included selling to another company, arranging a leveraged buyout by management or restructuring the company's finances.
Robert Haft said that if there were other offers, Dart Group would bid against them.