Safeway Mum on Reported Probe by SEC : Agency Allegedly Looking Into Details of Takeover Attempts
Safeway Stores Inc. declined comment Tuesday on a published report that the Securities and Exchange Commission, as part of its insider trading investigation, has asked for details about attempts to take over the giant supermarket chain.
Felicia del Campo, a spokeswoman for the supermarket chain, said Safeway would make no comment regarding the SEC probe, reported Tuesday in the Washington Post.
Unidentified sources said the SEC recently asked Oakland-based Safeway to provide details about the sequence of takeover events at the company last July and that the inquiry is part of the commission’s wide-ranging investigation of takeover deals involving the investment banking firm Drexel Burnham Lambert.
In late July, 1986 Safeway accepted a $4.1-billion buyout offer led by company managers and Kohlberg Kravis Roberts & Co., a Wall Street firm that specializes in management takeovers.
The management bid topped a $3.6-billion offer by Dart Group, which is controlled by the Haft family. But the Haft family of Washington, which controls Dart, made a profit estimated by some at $140 million on the failed Safeway deal, the Post said.
The Hafts were represented in the takeover deal by Drexel, which has acknowledged that it is a target of wide-ranging investigations by the SEC and the Manhattan U.S. attorney.
A Drexel executive closely involved in the Safeway deal was Martin A. Siegel, who pleaded guilty to insider stock trading and related charges last February.
Drexel Said Named in Probe
A source familiar with the matter told the Associated Press that the SEC has voted a formal order of investigation naming Drexel, which opens an investigation, and is making “fairly broad” inquiries about Drexel and those who deal with the firm. This source said, however, that the SEC’s inquiries on Safeway did not appear focused on any specific allegations.
The Post’s sources identified others involved in the Safeway takeover attempt as arbitrageur Ivan F. Boesky, who last fall agreed to pay $100 million to settle insider trading charges and who has pleaded guilty to a criminal charge of conspiracy to lie to the SEC, and Boyd L. Jefferies, a prominent brokerage executive who has admitted that he violated SEC regulations in stock trading.
SEC spokeswoman Mary McCue declined comment on the report. Drexel Senior Vice President Steven Anreder said of the report: “We don’t comment on matters that may or may not be the subject of investigation.”
The Safeway deal was just one of half a dozen instances in recent years when the publicity-shy Hafts have made unsuccessful hostile takeover bids and still cleared handsome profits.
More recently, family-controlled entities have acquired large stakes in several companies, including Supermarkets General Corp., and then sold their shares at a multimillion-dollar profit after threatening a takeover.
