Dart Group, undeterred by Dayton Hudson's rejection of its takeover bid, sweetened the terms by $3 a share Tuesday but directors of the retailing giant indicated that they would spurn the new offer, too.
Herbert H. Haft, Dart's chairman and Robert M. Haft, the company's president, said in a letter to the Dayton Hudson board that they would pay $68 a share plus stock in a surviving company for each of Dayton Hudson's 97.4 million outstanding shares. Under the latest terms, the offer carries a price tag of $6.62 billion.
The Hafts' previous offer, made Sept. 17 and rejected by Dayton Hudson's board last Friday, was $65 a share, or a total of about $6.3 billion.
Dayton Hudson stock rose $1.50 to $59.75 a share in New York Stock Exchange trading Tuesday.
In their letter, the Hafts expressed disappointment at the rejection of their initial offer.
"We believe that Dayton Hudson has not realized the promises or potential to which its stockholders are entitled," they said.
But Kenneth A. Macke, chairman and chief executive of Minneapolis-based Dayton Hudson, said later in a statement that the board of directors already had determined it would not negotiate with Dart Group and he saw "nothing in the revised proposal that changes these conclusions."
Nevertheless, he said, the board will formally review the proposal later, an indication that it had not been ruled out.
"Dayton Hudson will not barter its future," Macke said in the statement. "We are not interested in opportunistic proposals that would put the majority of the future value inherent in Dayton Hudson in the hands of Dart or other speculators.
"This value properly belongs to all our shareholders," he said. "We believe that our shareholders and other constituencies should continue to have the opportunity to fully realize the benefits of the businesses we are operating."
Macke also said Dayton Hudson "has no intention to restructure, recapitalize or reorganize."
Retail industry analysts expected Dayton Hudson to continue to oppose a takeover, but said the battle will become more difficult as Dart, based in Landover, Md., raises the stakes.
"They're putting more pressure on Dayton Hudson management and the board," said Jeffrey Edelman, an analyst with the investment firm Drexel Burnham Lambert Inc.
Donald I. Trott, an analyst with Dean Witter Reynolds, said Dayton Hudson and the Hafts were playing a game of "chicken."
Trott said he presumed Dayton Hudson would reject the offer, "and then I suspect the next step would be for the Hafts to trigger a mechanism whereby they call for a meeting of shareholders for the purpose of electing a new, more friendly board" that might approve their bid.
Trott said under Minnesota's new anti-takeover law--passed this summer at the behest of Dayton Hudson--provisions protecting a target company are not set in motion unless there is a hostile takeover. He said the Hafts could call for a shareholders' meeting without their bid turning hostile.
Dayton Hudson, meanwhile, has several defensive options available to it, including restructuring or allowing a "white knight"--a friendly suitor--to rescue it, Trott said. Edelman also mentioned a restructuring or recapitalization as possible steps the retailer could take.
Dayton Hudson, the nation's seventh-largest retailer, has had declining earnings for four consecutive quarters, due in part to markdowns in its Mervyn's apparel stores unit and to the cost of store renovations and expansions.
Noting the companies problems, the Hafts said Dart would bring "retailing, marketing, merchandising and real estate skills" to a merger, resulting in "a revitalized, more profitable and valuable New Dayton Hudson."