House of Fabrics’ Bid to Acquire Firm Stalls

House of Fabrics’ bid to acquire Fabricland has stalled, with Fabricland erecting an anti-takeover barrier that House of Fabrics will try to overturn in court.

House of Fabrics, a Sherman Oaks-based operator of the nation’s largest chain of sewing and fabric stores, launched a tender offer of $13.50 a share, or $44 million, for Fabricland on Jan. 10. Fabricland, based in Portland, Ore., operates fabric stores in the Western United States.

Fabricland, which rejected the offer as inadequate, has since adopted a shareholders’ rights plan, commonly called a “poison pill.” The plan is aimed at making the takeover prohibitively expensive for House of Fabrics should it keep pursuing the bid. House of Fabrics conceded last week that the plan “significantly impedes” its effort.

House of Fabrics has asked a federal court in Oregon to force Fabricland to redeem or terminate the rights. A hearing on the matter is scheduled April 11.

In the meantime, House of Fabrics extended the expiration of its tender offer to midnight Feb. 28; it was to have expired last week. The company also reiterated that its offering price is fair and that it has received no information that would warrant a higher price.

Separately, FMR Corp., the Boston holding company for the Fidelity group of mutual funds, said in a filing with the Securities and Exchange Commission that it reduced its stake in House of Fabrics to 10.4%, or 613,673 shares, from 11.6%. Two months ago, FMR owned about 16% of the company’s shares.