Wherehouse Entertainment on Wednesday rejected Shamrock Holdings' $92-million hostile takeover bid and disclosed it hired investment bankers to evaluate alternatives.
Its options include merging with another company, selling assets and repurchasing or selling stock, the company said in a filing with the Securities and Exchange Commission.
The Torrance-based retailer of music, computer software and videocassettes said it rejected Shamrock's bid for such reasons as Shamrock's lack of experience at running a home entertainment retailer and because Shamrock lowered its bid to $12 a share from $14.25 it offered in October before the stock market crash.
Wherehouse also complained in the filing that Shamrock's decision to launch its bid came during the Christmas season, which is Wherehouse's busiest time of year.
Wherehouse has 210 stores, mostly in California, and had annual sales of $225.5 million in the year ended Jan. 31.
In its SEC filing, Wherehouse also disclosed that it has paid $250,000 to retain two investment banking firms--Bear, Stearns & Co. and Furman Selz Mager Dietz & Birney Inc.--to evaluate options.
No Talks With Shamrock
Daniel Burch, vice president with D. F. King & Co., a proxy solicitation firm working for Wherehouse, would say only that the investment bankers are "performing customary services."
Shamrock President Stanley P. Gold said in an interview that Wherehouse executives have refused to speak with him and that company executives have a duty to consider Shamrock as a merger candidate.
"If they're looking at alternatives . . . then it is inconceivable for them not to be talking to us," Gold said.
Gold added that although Wherehouse rejected the bid, there is no indication in the company's SEC filing that Wherehouse's investment bankers or its directors have determined that Shamrock's offer to shareholders is inadequate.
Shamrock is a Burbank investment firm owned by the family of Roy E. Disney, nephew of the late Walt Disney, that has investments in such areas as broadcasting and oil services.
The company, which is making the offer through its Shamrock Acquisition II subsidiary, owns 867,700 of Wherehouse's 8.4 million shares, or about 10.3% of the shares outstanding.
May Lower Bid
Gold said Shamrock executives want to buy Wherehouse because they consider its business relatively recession-proof, adding that Shamrock has wanted to expand into specialty retailing for some time. He said Shamrock would operate Wherehouse pretty much as it is, should the bid succeed.
Shamrock has said it may drop its offer further, to $10 a share from $12 for the stock it doesn't already own, if can't reach agreement with Wherehouse on a takeover. Wherehouse President Lewis A. Kwiker did not return telephone calls seeking comment.
Wherehouse also said in its filing that it is keeping its so-called poison pill anti-takeover shield that Shamrock wants removed. Shamrock is suing Wherehouse in Los Angeles Superior Court to force it to rescind the poison pill.
On Tuesday, Wherehouse announced that it earned $427,000 in the third quarter ended Oct. 31.