Dayton’s CEO Says Anti-Takeover Law Benefits Stockholders
MINNEAPOLIS (AP) _ The top executive of Dayton Hudson Corp. said Friday that stockholders as well as the company would benefit from a law approved by the Minnesota Legislature to protect the giant retailer from hostile takeovers.
″Good shareholders look at the long-term interests of a company,″ said Kenneth A. Macke, the Minneapolis-based company’s chairman and chief executive officer. ″I think stockholders will be well served.″
The law, approved in a 5 1/2 -hour special legislative session convened Thursday at the company’s request, bars those who gain control of a company in a hostile takeover from selling any of its assets for five years.
That provision was intended to make lenders more reluctant to finance a hostile takeover of a Minnesota company, by limiting moves that could be taken to pay off debt incurred in a hostile takeover.
The law also allows boards of directors mulling takeover bids to consider the interests of employees, customers, suppliers, the community and society, as well as the interests of stockholders.
″There’s no 100-percent prevention of a hostile takeover,″ said Macke, appearing relaxed and confident following an eight-day campaign to protect the company from a possible hostile takeover attempt by the Maryland-based Dart Group Corp.
″I think it’s going to make it a lot more difficult for those companies that have not put financing in place to purchase other companies,″ he said.
Macke refused to comment on any communication with Dart Group or on the company’s strategy to protect itself further.
″There’s a lot of companies that would like to know what we’re doing strategically,″ he said.
A whirlwind chain of events involving the company began June 18, when Macke and Gov. Rudy Perpich announced at a press conference that the company was the subject of a takeover bid and was seeking legislative help to prevent it.
Macke later identified Dart Group Corp. as the unwanted suitor. The company, which has unsuccessfully sought to take control of six other retailers, has not returned numerous phone calls seeking comment.
The takeover bid was complicated Tuesday when Dow Jones News Service reported that a Cincinnati stockbroker representing a wealthy family was launching a $6.8 million bid to buy Dayton Hudson. The report turned out to be bogus.
The company’s stock, which had been trading at about $54 a share before the reports soared that day to about $63, with some 5.5 million shares trading hands. The stockbroker responsible has since been fired and admitted to a hospital, and several investors who bought stock at inflated prices have filed suit against him.
Dayton Hudson stock traded at $50.75 a share Friday on the New York Stock Exchange, up from $50 at Thursday’s close.
″I heard about (the bogus bid) on a car phone on my way to St. Paul″ to testify before the Legislature, Macke said. ″I honestly didn’t know what to think. It wasn’t a card I’d seen played before.″
Macke said the Dayton family, which held the company privately until 1967 and still holds a considerable amount of stock, have made no attempt to influence company policy regarding a possible buyout.
Two other provisions sought by state Attorney General Hubert Humphrey III and state Commerce Commissioner Mike Hatch but not by the company were included in the new law.
One restricts the practice of ″greenmail,″ the use of corporate funds to buy back stock from corporate raiders at premium prices. The other provision prohibits a target company’s executives from negotiating lucrative severence packages, called ″golden parachutes,″ while they are considering a tender offer.
Macke said he thinks the law could survive a legal challenge.
″We’ve had people looking at its constitutionality since this began. The state looked at it independently,″ Macke said. ″This is a very complicated thing. It serves no one if a law is passed and then is found to be unconstitutional.″
The law passed overwhelmingly, but was not without detractors.
Rep. Gil Gutknecht said the new law would harm 794,000 Minnesotans who own shares in public corporations by lowering the value of their holdings.
Dayton Hudson operates 17 Dayton’s stores; the 20-store Hudson’s chain based in Detroit; the Target discount chain with 246 stores in 22 states; the Mervyn’s specialty department store chain with 175 stores in 12 Western states and the Lechmere chain of 17 electronics and houseware stores concentrated in New England.
It is one of the nation’s largest general retailers, with sales of about $9.05 billion in its 1986 fiscal year.