Washington's Haft family yesterday launched its largest takeover bid, offering more than $6 billion to buy Dayton Hudson Corp. and pledging any stock profits to charities if the quest fails.
The bid is the highest ever for a retail company, topping this summer's $5 billion offer for Southland Corp., the parent of 7-Eleven convenience stores.
The Hafts, who in the past have been accused of seeking only profits and not the companies themselves in their takeover bids, said they were solely interested in acquiring the Minnesota retailer, the nation's sixth-largest department store operator. As proof, Herbert and Robert Haft said that if they failed to win support from Dayton Hudson shareholders, they would donate to Minnesota charities "any profits we may realize" from the stock they now hold in the company.
Robert Haft said his family holds a little less than 5 percent of Dayton Hudson's 97 million outstanding shares.
Sources close to the Hafts say the family paid about $50 per share for their stake. Herbert Haft is chairman of the Landover holding company, Dart Group Corp.; his son, Robert, is president.
In a letter to Dayton Hudson's board of directors, the Hafts offered to pay shareholders $65 per share for 95 percent of their holdings. The rest of the stockholders' shares would be exchanged for new securities that would equal a 20 percent interest in the newly created Dayton Hudson company.
In addition to the Dayton Hudson department stores, the company also owns the discount department store chains Target and Mervyn's, as well as Lechmere's, a consumer-electronics and home appliance chain. Last year, the company's sales totaled $9.3 billion; profits were $239.2 million.
Dart's bid was announced just after the New York Stock Exchange closed yesterday. At the close, Dayton Hudson was trading at $52.87 1/2 a share, up 50 cents. Jefferies & Co. Inc., based in Los Angeles, quoted a bid price of $60 last evening.
Under the Haft's proposal, the newly created Dayton Hudson would be a separate public company, with Dart as the majority shareholder, Robert Haft said in an interview. The headquarters would remain in Minneapolis, and existing management would be retained.
"We think our offer is full and fair," Haft said. "The company has underperformed over the last several years, but it has greater potential. We believe that with the expertise of Dart Group ... we can provide a greater value to shareholders, employes, the communities and charities Dayton Hudson serves," Haft said.
Dayton Hudson, in a statement issued last night, said the offer "will be considered by our board of directors in due course. No one should assume that any transaction will result."
However, many Wall Street analysts yesterday predicted that the company would vigorously fight the Hafts, citing the company's actions when Dart first approached Dayton Hudson officials in June. Less than two weeks later, Dayton Hudson won emergency state legislation to make it harder for unfriendly acquirers to buy Minnesota companies.
The law does not apply to friendly mergers as the Hafts are now proposing.
Some analysts suggested the company may look for another buyer. Among the possible companies named on Wall Street yesterday were May Department Stores, the nation's second-largest department store operator, which owns the local Hecht Co., and Sears, Roebuck & Co., the nation's largest retailer.
In any event, financial analysts said that they believed that Dayton Hudson will have to be sold for a higher price than $65 a share.
"We have thought the company could be potentially worth more than $70 a share," said Glenn E. Johnson of Piper, Jaffray & Hopwood Inc. in Minneapolis.
Although Wall Street was not surprised by the Hafts' bid, they were taken aback by the family's promise to donate their stock profits to charities should its bid fail. "That's the funniest thing I've heard all day," said Loeb.
However, analysts said the promise showed the Hafts' serious interest in Dayton Hudson. "This does suggest their bona fide interest that in the past has been questioned," said Edward Weller of Montgomery Securities.
Over the past three years the Hafts, in one way or another, have expressed interest in a handful of retailing chains. In the summer of 1986, they made a $3.9 billion bid for Safeway Stores Inc., the world's largest supermarket chain. Last March, they bid $1.7 billion for Supermarkets General Corp., the nation's sixth-largest supermarket operator.
In both cases, the companies' management thwarted the Hafts by outbidding them in leveraged buyouts in which the companys' assets were used to finance buying the publicly held stock of the company.
Although the Hafts failed to acquire the companies, they walked away from the deals with about a quarter of a billion in profits from the stock they acquired in their takeover targets.
Having bought their stock at a relatively low price -- before their interest was announced -- the Hafts have been able to sell their shares at a substantially higher price as the stock was bid up in the final takeover offer