Safeway Stores Vows to Resist If Dart Group Attempts Takeover
Safeway Stores on Friday vowed to remain independent despite indications by Dart Group that it might attempt to acquire the nation’s largest publicly held supermarket chain.
Dart Group, a Landover, Md., operator of book retailing and automotive parts businesses, disclosed Thursday that a partnership it controls had acquired 5.9% of Safeway’s 61 million common shares outstanding. The firm, which is controlled by the Haft family of Washington, also said in its filing with the Securities and Exchange Commission that its investment partnership “may seek to initiate discussions” with Safeway about “a business combination or other transactions.”
But Safeway Chairman Peter A. Magowan, in a terse statement issued from the company’s Oakland headquarters, said there were “significant additional values in Safeway.” He added that Safeway had “no intention of letting anyone usurp those values from our stockholders and will take all appropriate action to protect the interests of our stockholders.”
Stock Hits 52-Week High
Safeway’s stock, which jumped $2.50 on Thursday, rose another 25 cents Friday to close at $47.87 1/2, its high for the year.
A lawyer for the Dart Group partnership, Robert B. Hirsch, declined to comment Friday, saying the controversy “doesn’t deserve a response.” Hirsch has said that whether or not the Dart Group partnership acquires a bigger stake in Safeway depends on several factors, including “the availability of financing.”
However, several securities analysts have questioned whether Dart Group--which has made unsuccessful bids for May Department Stores, Jack Eckerd Corp. and Revco D.S.--wants to pursue a takeover bid for Safeway. They say Dart Group may only be interested in forcing a profitable buyback of its shares.
Dart Group owns Crown Books and Trak Auto, a discount auto parts retailer. The company earned $9.9 million on sales of $97.8 million in its fiscal year ended Jan. 31.
Safeway, which operates about 2,500 supermarkets, had net income of $231.3 million last year on sales of $19.6 billion.
Talks With Union Workers
One analyst suggested Friday that the intense speculation fueled by Dart Group’s SEC filing may ultimately benefit Safeway, which is currently undergoing critical contract negotiations with its unionized butchers, truckers and clerks that could affect the bottom line in its unprofitable 70-store division in Nebraska.
“Safeway could use the threat of this (SEC) filing to negotiate a more favorable contract with the unions and improve the return to shareholders,” said Jonathan H. Ziegler, vice president at Sutro & Co., a San Francisco investment house. Ziegler added that Safeway “could also probably sell off the division . . . (and) use proceeds to pay ‘greenmail’ ” to Dart Group.
Safeway adopted several anti-takeover measures in February. Among them was a so-called poison pill whereby Safeway’s holders received special rights that allow them--in the case of a hostile takeover--to buy stock in the surviving company for half-price. The idea is to make the acquisition prohibitively expensive for the unwelcome suitor.