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Carter Hawley Hale Again Targeted in Takeover Bid

November 26, 1986|MARTHA GROVES | Times Staff Writer

Carter Hawley Hale Stores, parent company of the Broadway and Neiman-Marcus, said Tuesday that it has received a $1.77-billion takeover bid from a partnership including the Limited, a specialty retailer that lost a bitter, months-long quest for the Los Angeles-based company in 1984.

The offer sets the stage for another no-holds-barred battle, with a much-changed Carter Hawley likely once again to vigorously defend itself against the Limited.

In the intervening time, the Columbus, Ohio, suitor has more than doubled in size as its chairman, Leslie H. Wexner, has won a reputation as one of the nation's premier merchants.

Carter Hawley issued a terse statement Tuesday afternoon, suggesting that the Limited's new offer--almost $700 million more than the last one--shows the company was justified in its earlier opposition. "This offer certainly proves that we were right in rejecting the Limited's offer in 1984. The board will consider it in the appropriate fashion."

Having been rebuffed in its earlier effort, the Limited this time has enlisted as its partner Edward J. DeBartolo Sr. of Youngstown, Ohio, the nation's largest shopping mall developer. Analysts indicated that the combination could prove lethal to Carter Hawley's independence.

The two, in a venture called Retail Partners, have offered $55 a share in cash for each of Carter Hawley's 32.1 million shares, on condition that they acquire at least two-thirds of the voting power of all stock by Dec. 31.

The Limited and DeBartolo have asked for a response by noon Sunday and said they are prepared to begin a tender offer for Carter Hawley's shares on Monday. Carter Hawley spokesman Bill Dombrowski would not comment specifically on the Sunday deadline, noting only that the board's next regularly scheduled meeting is Dec. 3.

Key to the deal is the response of Carter Hawley's biggest stockholder, General Cinema, which rescued the company in the Limited's aborted 1984 battle. Observers speculated that General Cinema might be inclined to sell its stake--equivalent to 38.6%--especially if the deal were sweetened. But that company declined Tuesday to indicate how it will respond.

Clearly, the Limited's offer hits Carter Hawley at a time when the retailer would rather be focusing on the crucial Christmas selling season. A defense effort would cost the company dearly in terms of managers' time and financial resources.

Mixed Signals

Wall Street analysts have suggested for months that the Limited would attempt another takeover, but Wexner has stated publicly in recent weeks that he was not planning to buy other big retailers. Last March, he said he planned to drop his quest for a department store company in favor of pursuing acquisitions of specialty stores.

In October, speculation heated up again after the company doubled its bank credit line to $1.4 billion. One industry source said: "This is an all-cash offer. There are no contingencies. And it's not to be financed with (high-risk, high-yield) junk bonds. It's a retail operator trying to buy retail stores."

Despite the consensus that the takeover fervor would cool in the wake of insider-trading investigations, the retailing sector continues to be ablaze with activity. This is partly because of attempts to complete takeovers before year-end, when tax reform becomes effective.

Recently, in fact, DeBartolo was outmaneuvered by Campeau Corp., a Canadian real estate developer that ultimately won Allied Stores and its well-known Ann Taylor and Brooks Bros. franchises.

May Department Stores, parent of May Co. California, in October completed its purchase of Associated Dry Goods, which owns J. W. Robinson.

Targets of Interest

Analysts speculated that Wexner is primarily interested in Carter Hawley's three profitable specialty units--Neiman-Marcus, Contempo Casuals and Bergdorf Goodman. On the other hand, the main interest of DeBartolo, whose holdings include the Mission Viejo Mall, would be Carter Hawley's department stores and real estate.

"I think the deal will get done," said Robert F. Buchanan, who follows Carter Hawley for the New York investment house of Dillon, Read & Co. "But Les Wexner knows full well that he can't buy control at $55 and knows he'll have to offer at least $60 a share. I would imagine being as smart as he is that he's fully prepared to raise the ante."

The offer, made in a letter apparently delivered to Chairman Philip M. Hawley on Monday, comes at a time when Carter Hawley is making significant strides toward improving profitability after several lackluster years.

The Limited's $1.1-billion bid in April, 1984, was a catalyst for some of the biggest changes--including the $295-million sale of the Waldenbooks division to K mart. Since then, Carter Hawley also has sold its Holt Renfrew subsidiary in Canada and has announced the sale of its 11-store Wanamaker division in Philadelphia.

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