Pic ‘N’ Save, Fighting Takeover, Puts Itself on Block : Retailing: Skeptical analysts say the effort appears half-hearted and may be just an effort to persuade shareholders that it is moving to boost the stock price.


Pic ‘N’ Save officials, trying to blunt a persistent takeover threat, on Friday launched what some analysts called a half-hearted effort to sell the company.

The close-out retail chain said it asked its investment bankers to contact prospective buyers. At the same time, Pic ‘N’ Save maintained that few buyers would be able to pay a fair price for the company because takeover financing for retail chains has dried up.

Pic ‘N’ Save also said it would open its confidential financial records to bidders only if they agree to a long list of restrictions.

Analysts said that, rather than really trying to find a buyer, company officials seem more interested in persuading shareholders that they are trying their best to strengthen Pic ‘N’ Save’s stock price.


“They want to maintain control of the company, and this is the way to do it,” said Marcy Koory, an analyst with Kirkpatrick, Pettis, Smith, Polian in Omaha, Neb.

Koory said it appears that Girard Partners, an investment group led by La Jolla financier David H. Batchelder, is gaining in its effort to unseat Pic ‘N’ Save’s board. Girard is seeking consent from shareholders to form a new five-member Pic ‘N’ Save board dominated by Batchelder and his partners. The group says it would buy Pic ‘N’ Save itself or auction it off to another bidder.

Girard has disclosed acquiring 6.7% of Pic ‘N’ Save’s stock, and on Monday the investment group said that it won the support of a key ally, Bill M. Thomas. A former executive vice president of Dominguez-based Pic ‘N’ Save, Thomas is believed to be its biggest individual shareholder, with 4% of its stock.

Batchelder declined to comment Friday.

Lewis B. Merrifield III, chairman and chief executive of Pic ‘N’ Save, promised that the company would make “an aggressive” effort to find a buyer. But he asserted in an interview that there is little prospect that Girard or another buyout specialist could come up with the financing to pay a fair price.

Rather, he said, the best prospect to acquire Pic ‘N’ Save at an attractive price would be a financially strong “strategic” buyer such as another big retail chain or a firm in a related line of business.

Merrifield said that since Girard announced its initial investment in Pic ‘N’ Save on April 11, “we have not received to date a single expression of interest from any other party” about a buyout.

He said the restrictions on access to the company’s confidential data are intended to avoid opening bidding “to speculators who would buy (Pic ‘N’ Save shares) at the cheapest possible price.”

“Girard Partners’ objective,” he said, “is not to pay a full and fair price.”

Among other things, Pic ‘N’ Save would require anyone who reviews its records to avoid acquiring any more of the company’s stock for three years unless it does so with an all-cash offer or the consent of its outside directors. Investors also would be barred from waging a proxy fight for the company.

“They’re trying to put a roadblock up for Girard Partners,” said Sarah Stack, an analyst with Bateman Eichler, Hill Richards in Los Angeles.

But an analyst for one of the company’s biggest institutional investors called Friday’s announcement a “positive step.” It signals that management “is aware” of the disenchantment among many shareholders, said Betty Keppel of the Wisconsin Investment Board.

Pic ‘N’ Save’s stock climbed in heavy over-the-counter trading Friday. It closed at $13.875, up 87.5 cents, but traded as high as $14.375 while 1.65 million shares changed hands.

The company has 190 stores in 12 states that specialize in close-out and other discount merchandise.


Daily closing price in dollars per share. Friday close: $13875, up $0.875

Source: Knight-Ridder Trade Center