Partners Alter Terms of Carter Hawley Bid : Seek Only Simple Majority of Shares, Say Cinema May Tender at $60

The partnership seeking to buy Carter Hawley Hale Stores on Monday changed a key condition of its proposal, effectively making it less crucial that the takeover win the support of General Cinema, Carter Hawley’s largest stockholder.

Separately, Retail Partners, a partnership of the Limited retail chain and shopping mall developer Edward J. DeBartolo Corp., told the Securities and Exchange Commission that General Cinema had indicated a possible willingness to sell its shares for about $60 each--which is $5 more than the current offer.

In the formal launching of its $1.77-billion tender offer, Retail Partners said it now seeks a simple majority of shares, down from the two-thirds that it set as a condition when the takeover proposal was announced Nov. 25.

“It’s not going to be easy, but certainly (this change) creates the possibility of having this tender offer succeed without General Cinema,” said analyst Robert A. Corea of the Ohio Co. investment house in Columbus, Ohio, where the Limited is based.

Analysts note that, to succeed, Retail Partners must enlist the support of either Carter Hawley’s two employee stock plans, which together hold about 20% of the retailer’s outstanding common shares, or of General Cinema. (Carter Hawley has about 32.1 million common shares outstanding, assuming the conversion of General Cinema’s 1 million preferred shares into 12.2 million common shares, or a 38.6% stake.)

General Cinema said last week that it would not support the $55-a-share offer. The two employee ownership plans supported management when it successfully defeated the Limited’s first takeover effort in 1984.

The tender offer, which is scheduled to expire Dec. 29, was begun even though Carter Hawley, the Los Angeles-based parent of the Broadway and Neiman-Marcus, did not respond to the proposal by noon Sunday, as the Limited venture had requested.

Carter Hawley’s board is scheduled to meet Wednesday. The company must respond to the tender offer within 10 working days.

Documents filed Monday by Retail Partners with the SEC indicate that Limited Chairman Leslie H. Wexner met Nov. 11 with General Cinema Chairman Richard A. Smith, who said his company would want a price “close to $60 a share for its block” if it were free to sell.

Under an agreement General Cinema struck 2 1/2 years ago, when it became Carter Hawley’s largest shareholder to rescue it from the Limited’s first takeover effort, the movie theater operator is not at liberty to tender any shares until the Carter Hawley board votes on the Limited’s offer. If the Carter Hawley board rejects a tender offer, however, General Cinema is free to do as it wants, a spokesman for the retailer said Monday.

Smith could not be reached for comment late Monday about recent meetings with Wexner and Edward J. DeBartolo Sr. General Cinema spokeswoman Janine Dusossoit declined comment.

According to the filing, the first contact between the bidders and General Cinema this year occurred Nov. 7, when Smith telephoned DeBartolo to ask whether the shopping center developer was contemplating a bid for Carter Hawley. DeBartolo neither confirmed nor denied a takeover plan. At that time, Smith expressed satisfaction with Carter Hawley’s management and said General Cinema had no interest in selling.

Four days later, Wexner met Smith in person and sought his reaction to a bid of between $50 and $52 by a third party other than the Limited. Smith noted that he was bound by a standstill agreement and said he preferred not to discuss the subject at all. According to the bidders’ version of the meeting, Smith said that “he hoped that no such offer would be made and that Limited would not participate in one. Mr. Smith went on to say that (General Cinema) would not be a seller at $52 a share, and at that price would consider buying if it were free to do so.”