Edelman Buys Payless Stake

Corporate takeover artist Asher B. Edelman and a Midwestern building materials company have acquired a 7.6% stake in Payless Cashways Inc. and said Thursday that they may try to acquire the company.

In documents filed with the Securities and Exchange Commission, Edelman and Sutherland Lumber-Southwest Inc. of Kansas City, Mo., said they had bought about 2.56 million shares of Payless, the nation’s third-largest building materials retailer. Payless has about 33.66 million shares outstanding, giving the company a market value of about $728 million at Thursday’s closing price.

Perry Sutherland, one of the family members that heads the privately held Sutherland Lumber, said he had no comment on an additional 519,000 shares of Payless stock that was traded Thursday. If the block went to the investment group, that would boost its stake to about 9.2%.

The Edelman group said in its SEC filing that it would consider selling Payless operations as “going concerns” in many regions of the country. Perry Sutherland said the group would “solicit acquisition proposals for these regions” before taking control of Kansas City, Mo.-based Payless.

Shareholders Rights Plan

Sutherland called it a “possibility” that his company would acquire at least some of the Payless operations that would be sold. “Our expertise in management is part of the partnership” with Edelman, he said.

Payless stock rose $1.375 a share to close at $21.625 in New York Stock Exchange composite trading.

Brenda Nolte, a spokeswoman for Payless, said late Thursday that the company was preparing a statement.

She confirmed that the Payless board of directors approved a complex shareholder rights plan last week to “protect shareholders from attempts to acquire control of Payless at an inadequate price.”