Dayton Hudson Bracing for a Fight

Kenneth A. Macke, chairman of Minneapolis-based Dayton Hudson, knows Herbert and Robert Haft of Dart Group only by reputation, but that’s enough to make him go to great lengths to keep them from getting their hands on his company.

The Hafts, among the nation’s best-known corporate raiders, already have bought a stake in the 85-year-old retailer. But if Macke has his way, they won’t be able to back Dayton Hudson into a corner. If they do take over, he fears, they’ll dismember the company, which owns the Target and Mervyn’s chains as well as Midwest department stores.

“We have been very good corporate citizens,” Macke, 48, said Sunday in a telephone interview from his home in Edina, Minn. “We frankly just think it’s crazy that someone can buy a minimum amount of stock, use Dayton Hudson as assets and sell them off . . . and destroy the company.”

Since learning last Wednesday from Goldman, Sachs & Co., his company’s investment banker, that Dart Group had bought an undisclosed “substantial amount” of the retailer’s shares, Macke has been enlisting grass-roots support for his cause of keeping the company independent.

Last Thursday, he took the unusual step of meeting with Minnesota Gov. Rudy G. Perpich to request a special legislative session to consider six amendments to the state’s anti-takeover law that would make it tougher for hostile suitors to buy companies. The amendments were written by Dayton Hudson.

One amendment would require a bidder to show proof of adequate financing before it could launch a tender offer. Another would prohibit an acquirer from selling off any assets or completing any mergers for five years after a takeover.

Last Friday, Macke met with local newspaper editorial boards and appeared on a public television program to explain how such legislation could stave off the takeover threat.

Meanwhile, Peter C. Hutchinson, Dayton Hudson’s vice president of external affairs and the man who oversees the company’s charitable foundation, met with nonprofit organizations to discuss their concerns should Dayton Hudson be taken over. Since 1946, Dayton Hudson has annually donated 5% of its pretax income to social programs and the arts. Last year’s total was $20 million nationwide, with half going to Minnesota groups.

“There is a warm feeling toward (Dayton Hudson) in Minnesota,” said Gerry Nelson, Perpich’s press secretary. Even so, he said, the governor has been careful to ensure “that the playing field stays level and that he doesn’t tilt too much in favor of management.”

Nelson said the governor would probably decide with legislative leaders today or Tuesday whether to call a special session.

Dayton Hudson’s recent performance “perhaps makes them more vulnerable” to a takeover, said analyst Mark D. Witmer of the Wessels, Arnold & Henderson investment firm in Minneapolis. Last year, the company suffered its first earnings decline in 17 years, and this year it is still grappling with problems at its Mervyn’s division, based in Hayward, Calif. The 180-store chain has suffered from high expenses, poor merchandising and the recession in Texas.