Pic 'N' Save offered new concessions late Wednesday to Girard Partners, the investment group threatening to seize control of the retailing company. But Girard rejected the proposals and vowed to continue its fight.
Dominguez-based Pic 'N' Save announced that it set up a special committee of three outside directors to oversee its efforts to find a buyer. Pic 'N' Save also said it would let Girard add two members to that committee and two directors to the company's seven-member board if the investment group does not make a buyout offer.
A Pic 'N' Save spokesman said the moves were prompted by questions Girard raised about the "sincerity" of the company's efforts to sell itself. Now, he said, "the company is saying, 'here's an opportunity to participate.' "
The spokesman said the members of the special committee--Bruce Karatz, David Amsterdam and John T. Gurash--are top executives of companies with no ties with Pic 'N' Save who "have no incentive to do anything other than conduct a full and fair auction."
Karatz is president and chief executive of Kaufman & Broad Home Corp. Amsterdam is president of Amsted Corp. Gurash is chairman of CertainTeed Corp. and former chairman of INA Corp.
Pic 'N' Save, as it has previously, sought to raise doubts about whether Girard genuinely wants to buy the company or if it simply wants to profit by launching a takeover fight. For its part, Girard continued to question whether Pic 'N' Save will make a full-fledged effort to sell itself.
Girard, which disclosed in April that it acquired 6.7% of Pic 'N' Save's stock, says it is seeking to take control of the retailer's board so it can buy the company itself or auction it to the highest bidder. It is trying to gain a majority on Pic 'N' Save's board either through a proxy fight at the company's annual meeting on June 20 or by winning shareholders' consent before then for a reconstituted five-member board.
Girard has faulted the rapidly expanding retailer for its declining earnings and sluggish stock price over the past year.
To blunt the takeover threat, Pic 'N' Save announced last Friday that it would talk to prospective buyers. At the same time, the company expressed doubts that anyone would be able to pay a fair price for the company because of the lack of financing available for a retailing industry takeover.
In a prepared statement, La Jolla financier David H. Batchelder, the head of Girard Partners, cited the doubts expressed by Pic 'N' Save. He then added: "Girard Partners will not legitimize the company's half-hearted bidding process by participating as a bidder or as minority directors.
"The shareholders of Pic 'N' Save will decide which board, the incumbent board or Girard's nominees, they want to represent their interests as owners of the company."
Pic 'N' Save initially placed a long list of restrictions on bidders that are granted access to its confidential financial information but offered earlier this week to ease those restrictions. The company said Wednesday that it remained willing to negotiate the terms of its proposed bidding process.
William D. Tichy, an analyst with Dean Witter Reynolds, said the newly announced concessions appeared to be only minor improvements over Pic 'N' Save's previous offer. He said the announcement mainly was intended "to convince shareholders that the management team currently in place is exploring all avenues" to boost the price of the stock.
Tichy said he doubted whether Pic 'N' Save could make any further concessions, short of ceding control to Girard, that would persuade Batchelder to drop his effort.
Batchelder "seems pretty adamant on seeing this thing through," Tichy said. "He's not going to stop in midstream."
Pic 'N' Save's stock climbed 50 cents a share to $13.125 in over-the-counter trading Wednesday. The latest announcements came several hours after the stock market closed.