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Haft Family Seeks Stake in Profitable Walgreen Chain

From the Washington Post

The Haft family of Washington, with one eye still on a possible merger with Kroger Co., now is seeking to buy $15 million of stock in Walgreen Co., the nation’s largest drugstore operator.

The Hafts’ action is the latest in a series of forays against major retailing companies in recent years by the father-son team of Herbert and Robert Haft, who have gained a reputation on Wall Street as corporate raiders interested in profiting from the pursuit of companies rather than completing takeovers. The Hafts have bid unsuccessfully in the past for retailers including Stop & Shop Cos., Safeway Stores Inc. and Supermarkets General Corp., making tens of millions of dollars from the sale of their stock in their targets.

Walgreen Chairman Charles R. Walgreen said the Deerfield, Ill.,-based company has been advised that the Hafts are seeking clearance for the stock purchase under the Hart-Scott-Rodino Antitrust Act, but Walgreen added: “It’s not known how much, if any, Walgreen stock the Hafts own.”

The Hafts refused comment on their interest in Walgreen, but Walgreen officials said they consider the Haft overture serious and vowed Wednesday “to take all actions necessary to protect our company and our shareholders.”

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‘Monitor Carefully’

Walgreen’s stock rose $1.25 to close at $35.25 in moderate trading on the New York Stock Exchange on Wednesday. But analysts said the movement could be attributed less to the Hafts’ interest than to Walgreen’s favorable year-end results, also released Wednesday. The company reported a 25% increase in profit on sales of $4.9 billion for the year that ended Aug. 31.

“The Haft announcement came, the stock went up one point, big deal,” said Walter Loeb, a retailing analyst at Morgan Stanley. “Obviously, the Hafts stimulate interest initially, but I do not feel that the Hafts are going to be able to level an attack on this company. (Walgreen) has strong defenses.”

Chairman Walgreen said in a statement: “We understand the Hafts have made investments in other public companies but have never completed the acquisition of a public company. . . . We will monitor the Haft situation carefully.”

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“Walgreen Co. intends to continue the course on which its success has been built--concentrating on our core business. We will not be distracted from that course,” Walgreen said.

The Hafts’ most recent target has been supermarket giant Kroger, which recently announced a financial restructuring that has been valued by the company at between $4.5 billion and $4.8 billion and was designed to repel the Hafts as well as a takeover offer from leveraged buyout specialist Kohlberg Kravis Roberts & Co.

Even though Kroger rejected their overtures for a “business combination” with the Hafts’ Dart Group Corp. holding company, a Haft spokesman said the family “remains interested in working with Kroger to strengthen the company and enhance their restructuring by providing additional equity.”

As in the case of Walgreen, the Hafts indicated their interest in Kroger through a Hart-Scott-Rodino filing, although it is not clear whether they actually bought any stock in the supermarket company.

WALGREEN AT A GLANCE A major drugstore chain based in Deerfield, Ill., operating more than 1,300 stores in 30 states and Puerto Rico. Forty percent of sales are generated in the Midwest and 40% in the Sun Belt. Company also operates some in-store restaurants.

Year ended Dec. 31

1987 1986 1985 Sales (billions) $3.16 $3.66 $4.28 Net income (millions) 94 103 104

Assets: $1.36 billion Employees: 36,000 Shares outstanding: 61.5 million 12-month price range: $24.75-38.75 Wed. close (NYSE): $35.25, up $1.25

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