Campeau Boosts Allied Stake; Court Halts Deal

Hostile bidder Campeau Corp. swooped into the market Friday, purchased 25.8 million shares of Allied Stores and announced that it had amassed majority control of the high-fashion retailer. But a federal judge quickly blocked the purchase temporarily.

At the urging of Allied, U.S. District Judge Pierre N. Leval issued a temporary restraining order against Campeau’s purchase, at least until a hearing next Friday.

The surprise move came Friday morning, when Campeau announced the purchase through Jefferies & Co. of more than 48% of Allied Stores’ stock for $67 a share, or $1.73 billion.

The stake, plus the estimated 4% of Allied stock that Campeau already owns, would give Campeau control of the huge retailer and derail a friendly offer for Allied by Ohio-based DeBartolo, the nation’s largest shopping-mall developer.

Allied, which owns Brooks Bros., Bonwit Teller and hundreds of department stores, went to court immediately to challenge Campeau’s move in the open market, alleging that it was an illegal tender offer in violation of federal securities laws.

Toronto-based Campeau also said in the morning that it planned to exchange each of Allied’s remaining shares for $68 in cash and securities, or $1.735 billion.