Pursuer Labels Pic ‘N’ Save’s Sale Effort a Sham
The investment group pursuing Pic ‘N’ Save charged Monday that the retail chain isn’t making a full-fledged effort to sell itself. It branded the company’s recently announced plans to find a buyer a “ploy” to placate shareholders and keep the current board in charge.
Girard Partners, the investment group, said it will continue trying to seize control of the board and won’t enter the bidding process proposed by Pic ‘N’ Save. Girard, which disclosed in April that it had acquired 6.7% of Pic ‘N’ Save’s stock, has said it wants to buy the company or auction it to the highest bidder.
The investment group’s salvo came in response to Friday’s announcement by Dominguez-based Pic ‘N’ Save that the company has asked its investment bankers to contact possible buyers. La Jolla financier David H. Batchelder, who heads Girard, echoed the comments of a number of analysts in calling the move a half-hearted effort.
He cited remarks by Lewis B. Merrifield III, Pic ‘N’ Save’s chairman and chief executive, who minimized the chances of finding a buyer. Batchelder also noted the restrictions that would be placed on any bidder given access to the company’s confidential financial data.
Batchelder labeled as unacceptable a “standstill” provision that would restrict a bidder’s ability to buy more Pic ‘N’ Save stock or wage a proxy fight for three years.
Pic ‘N’ Save’s board “does not have a sincere desire to conduct a full and fair bidding process for the company,” Batchelder said in a news release.
A spokesman for Pic ‘N’ Save called Batchelder’s charges “hogwash,” and said the company is “doing everything it can think of” to get a fair purchase price. In a news release, the company also said that Girard rejected “significant concessions” offered in talks over the weekend “to induce them” to bid.
Pic ‘N’ Save said that, among other things, it offered to shorten the standstill period. The company also said it would allow Girard to “view the auction process personally.”
If Girard gains control of the board, Pic ‘N’ Save said, “the bidding process could be severely hampered.” Other bidders might back away, the company said, “because they will fear that Girard has the ability to review the precise terms of their proposals before having to decide whether to make a proposal of its own.”
Batchelder countered that his group wants to represent the interests of shareholders who are concerned that Pic ‘N’ Save isn’t making a real effort to find a buyer. By gaining control of the board, he noted, Girard could handle the auction.
Girard is trying to gain control either through a proxy fight at the company’s June 20 annual meeting or by winning shareholders’ consent for establishing a new board dominated by Girard nominees.
In response, Pic ‘N’ Save first promised to boost its earnings by slowing its expansion program, then said it would talk to prospective buyers. Its deadline for bids is July 15.
Pic ‘N’ Save’s stock fell $1.25 to $12.625 in over-the-counter trading Monday. The company sells close-out merchandise at 190 stores in 12 states.
Sarah A. Stack, an analyst with Bateman Eichler, Hill Richards in Los Angeles, said the decline in the shares may have stemmed from takeover stock speculators losing patience with the slow pace of developments and deciding to sell their Pic ‘N’ Save holdings.
