Shareholders OK Carter Hawley Breakup
Shareholders of Carter Hawley Hale Stores on Wednesday overwhelmingly put their stamp of approval on the Los Angeles retailer’s plan to split into two companies.
Ratification of the long-planned restructuring, which thwarted a takeover effort by the Limited late last year, clears the way for the old-line Southern California company to spin off its well-regarded specialty stores into a new company, called Neiman-Marcus Group, while retaining its five department store chains, including the Broadway.
General Cinema, the largest shareholder with just under 50%, will control about 61% of Neiman-Marcus Group, made up of Neiman-Marcus, Bergdorf Goodman and Contempo Casuals.
The deal was approved at a low-key annual meeting attended by about 625 people at the Hyatt Regency Hotel. Upon hearing that more than 90% of eligible shareholders had approved the plan and that more than 97% had approved the new slate of directors, Chairman Philip M. Hawley quipped: “That’s almost more votes than Mr. Gorbachev gets.”
Under laws in Delaware, where the company is incorporated, the deal required approval by a majority of holders with stakes of less than 10%. The rule is designed to protect small investors.
Hawley faced only one question from the audience--posed by an elderly shareholder who said he had been out of town and had not yet read the company’s 568-page proxy statement. As the holder of 513 shares, he asked: “What do I get in return?” for the corporate split.
Under the plan, Carter Hawley shareholders will be eligible to receive a share in the new company and $17 in cash for each Carter Hawley share, which they would also retain. Distributions are expected to be made in early October.
Shoppers should soon start noticing some changes at Carter Hawley’s 114 department stores, Hawley indicated during a news conference after the meeting. The company plans to spend an average of $40 million a year during the next four years on store remodelings.
Wall Street continued to react favorably Wednesday to the restructuring plan. In trading on the New York Stock Exchange, shares of Carter Hawley rose $1.125 to $77, a record high.
In anticipation of the restructuring, shares were also traded on a “when-issued” basis in Neiman-Marcus Group and the emerging department store company, which will keep the Carter Hawley Hale Stores name. Neiman-Marcus rose 0.625 cents a share to $43.875, while Carter Hawley closed unchanged at $16.50.
