$1.8 Billion Bid for Carter Hawley : The Limited, Ohio Mall Developer Attempt a Takeover
Carter Hawley Hale Stores, parent company of the Broadway and Neiman-Marcus, today received a $1.8-billion takeover bid from a partnership including the Limited, a specialty retailer that fought bitterly to buy the Los Angeles-based company in 1984.
The Limited, together with Edward J. DeBartolo Sr., an Ohio-based shopping mall developer, offered $55 a share for each of Carter Hawley’s 32.1 million shares, on condition that they acquire at least two-thirds of the voting power of all Carter Hawley stock by Dec. 31.
Only two years ago, Carter Hawley went to the mat to avoid a takeover by the Limited, and another major battle could develop here. Carter Hawley spokesman Bill Dombrowski said the company had no immediate comment.
“We are prepared to proceed by tender offer commencing on Monday,” the Limited and DeBartolo said, “so that your shareholders may receive payment for their shares by Dec. 31, 1986, before the new tax code eliminating capital gains treatment goes into effect.”
Carter Hawley is the latest in a long string of rumored or actual retail takeover targets that have included Allied Stores and Federated Department Stores. In one of the most significant deals, May Department Stores, which owns May Co. California, recently bought Associated Dry Goods, parent of the J. W. Robinson department store chain.
The hectic activity in retailing shows no signs of slowing despite a consensus on Wall Street that the insider-trading investigation into Ivan Boesky and the Drexel Burnham Lambert investment banking house would cool the takeover ardor.
However, analyst Robert F. Buchanan of Dillon, Read & Co., a New York investment house, said he expects that “the deal will get done, although Les Wexner (the Limited’s chairman) knows full well that he can’t buy control at $55 and knows that he’ll have to offer at least $60 a share. I would imagine being as smart as he is that he’s fully prepared to raise the ante.”
Analysts speculated that Wexner and DeBartolo might already have enlisted the support of General Cinema, a company that controls an estimated 36% to 38% of Carter Hawley’s voting power. By agreeing to buy a large stake in Carter Hawley in April, 1984, General Cinema, the nation’s largest motion picture exhibitor, was instrumental in thwarting a $1.1-billion bid by the Limited.
Since Carter Hawley successfully beat back the Limited during several months of maneuvering, the company, under Chairman Philip M. Hawley, has been turning around after years of lackluster performance.
Analysts recently have said that the company’s improvements made it more attractive as a takeover candidate.
The Limited, which operates such specialty apparel stores as the Limited, Victoria’s Secret and Lane Bryant, has expressed particular interest in Carter Hawley’s lucrative Neiman-Marcus franchise. In addition, Wexner presumably would be interested in the company’s Contempo Casuals locations.
