Bizarre Twist in Takeover Battle for Federated : Retailer Urges Holders to Offer Stock to Campeau; Calls Macy’s Bid Superior
The fight over Federated Department Stores took a bizarre twist Sunday as Federated reluctantly urged its stockholders to tentatively offer their shares to rival Campeau Corp.
But in doing so, Federated, owner of Ralphs supermarkets and Bullock’s department stores, expressed hope that Campeau’s takeover bid will be derailed at a crucial federal court hearing this afternoon in New York.
The unusual action came as a midnight Tuesday deadline approached for the Campeau bid, a bid that now apparently will be extended at least three days.
New York analyst Monroe Greenstein, of Bear, Stearns & Co., speculated that Federated, which is supporting a competing bid by R.H. Macy & Co., either was indicating that it believed the odds were in Campeau’s favor or it was trying to satisfy some legal obligation to stockholders.
“It’s not over yet,” Greenstein said. “Macy’s may still come back with another offer.”
Deadline Announcement Expected
Today’s hearing in federal court is expected to touch on many of the legal issues surrounding the purchase of Federated. Campeau is trying to kill a Federated anti-takeover defense, while Macy’s seeks to force the Canadian company to extend its offer.
Campeau’s initial Jan. 25 offer of $47 a share, or $4.2 billion, had been pushed up several times. After it was last amended, Macy’s filed suit alleging the amendment constituted a new offer under securities laws and must be kept open for 20 business days.
“Stockholders will be free under applicable Securities and Exchange Commission rules to withdraw any shares tendered to Campeau if after the court proceedings . . . Campeau’s offer is extended as Federated believes is required by law,” Federated said.
Campeau is seeking in court to kill Federated’s “poison pill” takeover defense, which would allow Federated stockholders to buy newly issued shares at a discount if a hostile suitor acquired at least 15%. Arbitragers considered that key to whether they would tender to Campeau, which conditioned its offer on winning.
Lawyer Allen Finkelson of the New York firm Cravath, Swaine & Moore, which represents Campeau, said the developer would announce today that it was extending its bid to midnight Friday from midnight Tuesday, but said it was not in response to Federated’s announcement.
Greenstein said Campeau may have extended the offer on the chance the court would not rule immediately.
It was the Tuesday night deadline and the structure of Campeau’s offer that seemed to put the pressure on the Federated and Federated stockholders.
Campeau’s bid would pay $75 a share in cash for the first 80% of Federated shares offered for purchase, and $44 for the rest.
Under those terms, arbitragers and other shareholders have feared they could be locked out of $75 a share if they did not offer their shares to Campeau by the deadline, and instead be left with $44 a share.
Federated said its board was “reluctantly advising all Federated stockholders to tender their shares to Campeau to ensure that they are not relegated to the $44 back end.”
