Dayton Hudson, the Minneapolis-based parent of Target and Mervyn's, confirmed Friday that Dart Group has been aggressively buying its stock, and it began extensive efforts to fight a takeover.
Bolstering its defenses in the face of what appeared to be an imminent hostile takeover bid, the retailer met Thursday afternoon with Minnesota Gov. Rudy G. Perpich to request a special legislative session to consider toughening the state's 1983 anti-takeover law. In that meeting at Dayton Hudson headquarters, company Chairman Kenneth A. Macke proposed six amendments that would make Minnesota's law similar to Indiana's tough anti-takeover legislation, which was recently upheld by the Supreme Court.
In a statement Friday, the governor said he is considering the request. Mara Johnson, a spokeswoman, quoted Perpich as saying: "We will not act hastily, but we will not hesitate to protect a good Minnesota company that provides jobs to Minnesotans."
A Dayton Hudson spokesman said the company mailed a letter Friday to its 115,000 employees indicating that the company was communicating with an "aggressive accumulator of stock" that it later identified as Dart Group, a company that had for several days been rumored to be interested in the company. Dart Group has routinely declined comment.
Dayton Hudson, also the parent of some Midwest department stores, employs 34,000 Minnesota residents and is a "home-grown company that is very much a part of the community," said Glenn E. Johnson, an analyst withPiper, Jaffray & Hopwood.
Johnson said the company--whose stock closed Friday at $56.50, up 25 cents a share--would warrant a bid of at least $70 a share, or nearly $7 billion for the company's 97 million outstanding shares. Under an amendment proposed by Dayton Hudson, a bidder would have to show proof of adequate financing before launching a tender offer. Such a provision would effectively deter a raider from making a bid strictly with the intention of forcing the company to pay "greenmail," takeover parlance for a premium paid to get rid of a hostile suitor.
Dart Group, a holding company that previously has made hostile bids for Safeway Stores, Supermarkets General and other companies, has made an estimated $150 million in recent takeover attempts.