Edelman’s Losses Said to Augur Change

Asher B. Edelman has run into big financial reversals on both sides of the Atlantic, and the corporate raider’s troubles reflect a sea change in the way takeovers are being carried out in the United States, stock speculators say.

“Asher was a very effective raider of the past, (but) his type of raiding is not viable anymore. It’s not surprising Asher is not going to do this business anymore,” an arbitrager said.

Arbitragers contend that Edelman has lost $40 million to $50 million on a stake he took in Storehouse PLC, a British retail group that is restructuring. He is also facing a financial crunch at Datapoint Corp., a computer data processing group he heads.

Neither Edelman, once one of the most dreaded U.S. corporate raiders, nor a representative, was available to comment.

“He lost his money. He’s been doing poorly. He started to drink his own bathwater, which is a problem in this business, thinking you can do no wrong,” said Sharon Kalin, president of Athena-Coronado Management.

Edelman, 50, stalked some of the biggest U.S. corporations during the 1980s, including Fruehauf Corp., Burlington Industries Inc. and Lucky Stores Inc.

Three years ago he began investing in Europe and turned a reported $40-million profit on a stake in Lonrho PLC.

But Edelman’s investment in Storehouse was ill-timed. Its shares have dropped sharply in the year he has held the stake, and his expected buyout offer never came. “He invested a lot of money in Storehouse. I understand he lost a third,” Kalin said.

Arbitragers also said that Edelman has lost money this year speculating on U.S. takeovers, including the failed management buyout bid for UAL Inc.

At the same time, Datapoint is having trouble with its bank lenders, and there are rumors that the company may suspend the quarterly dividend on its preferred shares.

Edelman’s troubles “show the state of the takeover market. It’s changed. As we go into the ‘90s, the strategic buyers or the Marvin Davises--guys who have lots of money--will lead,” said an arbitrager.

“The raiders died with the junk bond market,” said Kalin, pointing to the decline in recent years of financiers Paul A. Bilzerian, Alan Bond, Ivan F. Boesky and Robert Campeau. “The decade of the raider is over.”

The arbitragers said heavily leveraged takeovers relying on so-called junk bonds or loans from banks or brokerages will be rare.

“You have to have a strategic reason to buy a company. You have to have a lot of equity,” another arbitrager said.