Campeau Might Sweeten Its Bid if Allied Is Willing to Negotiate

Campeau Corp. on Friday launched a $58-a-share tender offer for 64% of Allied Stores, the owner of Brooks Bros., Bonwit Teller, Ann Taylor and 15 department store chains, but said it would be willing to consider sweetening its bid if Allied agreed to negotiate.

The tender offer was started a day after Allied’s board rejected an offer by the Toronto-based real estate developer to pay $58 a share in cash and securities, or about $2.74 million, for all of Allied.

Allied, a New York-based retailer that is generally regarded as being well run, operates 665 stores in 46 states, including specialty stores and such department store chains as Jordan Marsh in New England and Florida, Joske’s in Texas and the Bon in the Pacific Northwest. An Allied spokesman had no comment Friday on the tender offer.

In a letter to Allied Chairman Thomas Macioce, Robert Campeau, chairman and chief executive of Campeau Corp., said: “We would like to emphasize that it is our strong preference to enter into a friendly, negotiated transaction and that we are prepared to meet at any time.”

The tender offer by Campeau, which expires at midnight EDT Oct. 9, is for up to 30 million of Allied’s 47.2 million common shares. It is conditioned upon Campeau arranging adequate financing and receiving a majority of Allied’s shares. In addition, it hinges on Allied’s board approving the offer.

Campeau, which already owns somewhat less than 5% of Allied, said it began the tender offer to win control of Allied “as a first step in acquiring the entire equity interest.” The company said it continues “to believe that the $58-per-share price is fair and generous.”

Analysts Disagree

However, analysts have stressed that the price is considerably under what Allied should draw. J. Donald Tigert, an analyst at the Burns Fry Ltd. brokerage in Toronto who follows Campeau, said that the $58 bid is a good “strategic move” but that $65 is a price that “I would encourage them to go to.”

He noted that Campeau has already offered Allied managers a 15% stake in the merged company if they stay on for six years, which he termed “a big incentive.” Campeau has no experience operating retail stores and “is interested in working with (Allied) management to grow the business,” Tigert said.

Second Most Active Issue

This is not likely to be a large enough inducement, said William N. Smith of Smith Barney, Harris Upham in New York. “Macioce will do everything he can to retain control,” he said. “I don’t think he wants to be a partner with Mr. Campeau.”

In trading Friday on the New York Stock Exchange, Allied shares closed up $1.25 at $59.125. With 3.5 million shares trading hands, it was the exchange’s second most active issue.