Dayton Hudson Rejects New Offer by Dart
Dayton Hudson’s board on Wednesday rejected as inadequate a sweetened $6.62-billion takeover bid from Dart Group.
“We do not believe that Dart has the ability to put the financing in place to acquire Dayton Hudson,” said Kenneth A. Macke, chairman and chief executive of the nation’s seventh-largest retailer.
“The Dart Group looks like a speculator and an arbitrager to us,” Macke said in a prepared statement.
He dismissed a report from Paine Webber Inc., the financial adviser hired by Dart, that said the investment firm was “highly confident” that Dart could afford the acquisition.
“Paine Webber’s advice is limited to ‘junk’ bond financing and does not cover approximately $5.9 billion of senior financing,” Macke said.
Last month, Dart, based in Landover, Md., offered to buy Dayton Hudson by paying $68 in cash, or $6.62 billion, plus stock in a surviving company for each of Dayton Hudson’s 97.4 million outstanding shares.
Prevents Selloff
Dart earlier offered $65 a share plus stock for each Dayton Hudson share, for a total of about $6.3 billion. Dayton Hudson rejected that offer as inadequate, and Macke said the renewed bid was not substantially different from the first.
Retail industry analysts had expected Dayton Hudson to reject the sweetened bid.
Earlier Wednesday, some Dayton Hudson shareholders filed a class-action suit against the Minneapolis-based retailer and its board, challenging the constitutionality of the Minnesota anti-takeover law.
The suit alleges that the law--passed at the behest of Dayton Hudson--violates federal securities laws and that Dayton Hudson and its directors “have not fulfilled their obligations to fully and fairly consider acquisition proposals, including the pending Dart acquisition bid,” the shareholders said in a statement through two of their attorneys, Marshall Patner and Geoffrey Miller.
The law, which is designed to thwart hostile takeovers, contains a provision that precludes a corporate raider from selling assets of a target company for five years in order to pay off debt incurred in the takeover.
