NEW YORK — Investor Asher B. Edelman said Wednesday that he is withdrawing--for now--his $37-a-share offer to buy Lucky Stores but has not given up his quest for the California retailer.
In an interview in his Fifth Avenue headquarters overlooking Central Park, Edelman also rejected suggestions that he is to blame for Lucky's decision to close its 80 Gemco stores and put 14,000 employees out of work. Lucky sold the workers "down the tubes," in an effort to thwart him, he said.
"I feel really bad for those people," the takeover artist said in his office, the walls of which are covered with large contemporary paintings by the likes of Frank Stella and Jasper Johns. "Gemco was totally mishandled. They fired the employees for the purpose of selling the real estate clean.
'Could Have Kept Jobs'
"They felt they had to rush the deal through to defend themselves against me, (but) I don't think you make these sacrifices of people's lives on the basis of 'Get rid of Asher Edelman.' I would have taken the time with the union and the buyer to work it out so that the workers could have kept their jobs."
Lucky, the Dublin, Calif., retailer that primarily operates food stores, moved quickly when it decided to close the Gemco membership department store and sell 54 of the locations to Dayton Hudson's Target division. The company said the move was a key element in a restructuring designed to improve its value to stockholders. It was also widely viewed as a move to ward off Edelman.
Severance benefits for most Gemco employees are still under negotiation between Lucky and the United Food and Commercial Workers union. As employees await word, most are working at the stores' liquidation sales and studying job postings on bulletin boards.
Edelman's decision to withdraw his $1.9-billion offer followed by a day a meeting between Edelman and Lucky at which Lucky officials reportedly said that they plan to increase to 40% from 22% the amount of stock it plans to buy back for $40 a share. Judith Decker, a Lucky spokeswoman, declined Wednesday to comment on those reports or on Edelman's remarks.
Edelman, who sources say now holds more than 3% of Lucky's 51.6 million shares, contends that the value of all of Lucky's maneuvers combined--including the sale of Gemco and the planned sale of its specialty store division--will not bring the share price up to his $37-a-share bid, largely because of tax liabilities on the deals.
Now that he is withdrawing his offer, he said he plans to stand back and watch Lucky's share price settle accordingly. Once it does, he intends to be ready with a lower bid. (In composite trading Wednesday on the New York Stock Exchange, Lucky shares closed at $34.25 a share, down 37.5 cents.) Edelman would not comment on when or whether he might launch a hostile tender offer.
Sitting in his modern office, decorated with arty clocks, black furniture and gray carpeting, the nattily dressed Edelman, 46, might seem far removed from the unsettled Gemco employees in the West. But two employees who sent him angry letters got personal replies, he said.
"I believe heartily that if Lucky's directors were paying attention to the real constituencies--the shareholders, employees and customers--instead of to management, they would have arranged for those employees to be hired by Dayton Hudson," Edelman said. "Gemco was a business that was going to sink Lucky. It's fascinating that (Lucky management has) been able to convince the employees that they lost their jobs because of me."
George Hite, a Target spokesman in Minneapolis, said his company will begin hiring for each remodeled store 30 to 45 days before its opening.
"Earlier than that, we will be beginning to assemble our management people," he said. "I'm confident that in the course of doing that, we will be in contact with many of the people who are in those kinds of jobs at Gemco to determine their level of interest in working with us and whether they're qualified."
Typically, a Target store has 225 names on its payroll at a given time, he added.