Kroger Still Considering Reorganization
Sep. 20, 1988
CINCINNATI (AP) _ Kroger Co., the nation's largest grocery chain, has reaffirmed its plans for a major restructuring after receiving an unsolicited $4.32 billion takeover bid from the Haft family of Maryland.
Kroger received the $55-per-share bid for each of its 78.6 million outstanding shares on Monday by the Haft's Dart Group Inc. The offer was revealed in a letter to Kroger's board by Dart Chairman Herbert H. Haft.
In his letter, which was made public by Kroger, Haft said Dart was offering shareholders $43 cash per share and securities with a trading value of about $12 per share.
''All terms, including price, are negotiable and we are confident that together wer can determine and appropriate, proportionate ownership of the combined companies by Dart Group's shareholders and Kroger's shareholders,'' Haft said.
The news of the offer pushed up Kroger's shares Monday. In active trading on the New York Stock Exchange, Kroger rose $1.75 a share to close at $52.75. Kroger, based in Cincinnati, operates more than 1,300 supermarkets, 935 convenience stores and 15 membership warehouses in 29 states. The company also processes a variety of food products for sale in its retail stores and to outside customers.
Dart, based in Landover, Md., owns the Crown Books bookstore chain and the auto parts retailer Trak Auto Stores.
Last week, Kroger said its board was considering a $3.8 billion restructuring that would involve a special dividend of $40 a share in addition to a junior subordinated debenture with a trading value of about $8 per share.
Kroger spokesman Paul Bernish said that while Dart's offer was being reviewed, the company has not dropped its plans for the restructuring, which is scheduled to be taken up by the board at the end of September.
The company declined further comment.
The Kroger bid was the first takeover offer Dart has made since its failed bid for Stop & Shop Cos. earlier this year. The Haft family has expressed interest in F.W. Woolworth Co. and Zayre Corp. this year, but has not bid for either retailer.
Haft and his son Robert have earned reputations as corporate raiders because they have bought up big stakes in retailers, made unsuccessful takeover bids and then profited from the sale of their stock when the companies bought back the shares or went private in buyouts by other firms.
Their targets in the past have included Supermarkets General Corp., Safeway Stores Inc. - both of which are supermarket companies - and Dayton Hudson Corp.
The Hafts maintain they are interested in buying and operating a retail company.
In early August, the Hafts filed for federal approval to acquire a substantial stake in Kroger.
Analysts had mixed reactions to the latest Dart offer.
Edwin Pincus, an analyst with Josephthal & Co. Inc. in New York, said he doubts the sincerity of the buyout offer because it wasn't made until after Kroger's restructuring proposal was announced.
''If they were serious, they would have done it before the fact,'' Pincus said. ''They've done it after the fact.''