Allied Stores OKs $3.2-Billion Merger With DeBartolo
Allied Stores, one of the nation’s largest retailers, has agreed to a $3.2-billion merger with America’s largest shopping mall developer.
In a statement Tuesday night, the company said it had agreed to merge with the Edward J. DeBartolo Corp. through a tender offer valued at about $3.55 billion.
DeBartolo made the offer through ASC Acquisition Corp., a company 90% owned by Edward J. DeBartolo Sr. of Ohio and 10% owned by Paul Bilzerian, a Sacramento investor.
Allied had received two offers from Campeau Corp., a Toronto-based real estate developer, which most recently said it would pay $66 a share for about 75% of Allied Stores’ common stock and securities for the remaining shares.
Campeau wasn’t talking Wednesday, but retail analysts said they didn’t expect the Canadian developer to come back with a sweetened, hostile bid for Allied.
In addition, several analysts said they did not expect the acquisition of Allied by DeBartolo to result in the dismantling of the retailing company.
Campeau, which also develops shopping centers and other real estate, issued no immediate comment following the late Tuesday announcement of the deal.
A call to Campeau’s Toronto headquarters was referred to the company’s spokeswoman in New York, Lissa Perlman of the public relations firm Kekst & Co., who said she had no comment.
Allied said its board of directors approved the $67-a-share cash offer from DeBartolo, which is conditioned on a majority of fully diluted shares being tendered. The board recommended that its shareholders accept the cash tender offer, which began Wednesday and expires Nov. 6, Allied said.
Allied has 53 million shares outstanding, if all options on its stock are exercised.
Allied’s stock jumped $2 to $67 in New York Stock Exchange composite trading. The stock was the most actively traded in the composite dealings, with 5.974 million shares changing hands.
Allied operates 684 stores, including the Brooks Bros. and Bonwit Teller chains.
The company earned $159.3 million on revenue of $4.14 billion in fiscal 1985.
DeBartolo, 74, has made the Forbes magazine list of America’s 400 richest people. He is based in Youngstown, Ohio, and his companies, which are private, own 51 shopping malls.
“It looks to me like it has a pretty good chance of going through,” said Joanne Legomsky, a retailing analyst with Standard & Poor’s, who called $67 a share in cash a good offer.
Noting that Campeau had sought approval of its takeover bid from the Allied board, Legomsky said: “My feeling is that they are not that hostile.”
Monroe Greenstein, an analyst with Bear, Stearns & Co., said: “Allied found its white knight, so Campeau would have to come up with more money, cash.”
But Greenstein also said he did not believe that Campeau Chairman Robert Campeau would raise the offer above $67 a share in cash because, “given the size of his operations, his risk may be enormous.”
Walter Loeb, a retail analyst with Morgan, Stanley & Co., said: “I frankly think it’s a done deal. I also feel that Allied went to a level that preempted another bid because my valuation doesn’t justify more than the current price.”
Loeb also said he did not believe that DeBartolo would sell off any of Allied’s assets.
No Duplication of Assets
Legomsky said Allied was being acquired by a non-retailer, “which sort of reduces the likelihood of having to eliminate anything. It’s not so much a question of duplication of assets.”
But she noted that DeBartolo’s interests were privately held, “so we don’t know what their (financing) needs are.”
Campeau last month offered to pay $66 a share in cash for 40.75 million Allied shares under friendly terms. Then it had planned to swap each of the remaining shares of stock for $66 worth of securities.
At the same time, it offered to pay $63 in cash for all of Allied’s stock, if the retailer’s board preferred that.
Campeau earlier made a hostile tender offer of $58 a share in cash for 30 million shares after Allied’s board rebuffed its initial, friendly overtures.
Financing commitments for the transaction have been received from Shearson Lehman Bros., Manufacturers Hanover Trust, Bankers Trust and Chemical Bank, ASC said.
DeBartolo said that if his offer was successful, he planned to move some Allied divisions to Youngstown, although he said Allied’s top management would remain in New York. ALLIED STORES AT A GLANCE Allied Stores Corp., based in New York, operates 684 department and speciality stores in 46 states, including Brooks Bros., Bonwit Teller and Ann Taylor.
Year ended Jan. 31 1986 1985 1984 Revenue (in billions) $4.14 $3.97 $3.68 Net income (in millions) $159 $141 $128
Assets: $2.8 billion
Employees: 63,800
12-mo. stock price range (NYSE): $27.00-$67.00
Wednesday’s close: $67.00, up $2.00
