The Red Baron may fire the opening shot today in what might become another takeover battle for Strawbridge & Clothier.
Ronald Baron, who owns Baron Capital in New York City, is expected to file information about his holdings today with the Securities and Exchange
Commission. His 1984 takeover bid for Philadelphia's last independent department store chain set off corporate fireworks in the normally staid firm.
But because of an SEC technicality, the filing won't disclose his ultimate intentions. Will Baron resurrect his ambitions to acquire the company?
There is no outward sign that store officials still fear his advances, although investors suspect that Baron Capital now owns an estimated 6 percent of Strawbridge's stock.
Informed that Baron's filing is due today, corporate secretary Steven Strawbridge said, "I wasn't aware that it was due. If he does hold more than 5 percent of our stock, which we don't know, yes, we would receive a copy of the SEC documents."
Strawbridge said he knew no particular reason for the recent rise in the price of Strawbridge's stock. Strawbridge's shares jumped 16 percent in January alone. The most recent price was $48 a share.
"I think there is just a lot of interest because of the BATUS planned sale of Gimbels, and the Altman's sale. When anything is in the papers like that, it creates interest in other retailers' stocks," Strawbridge said.
In the wake of Baron's takeover bid in 1984, Strawbridge's passed several anti-takeover measures and bought back a block of its stock, preventing it
from being sold to Baron.
But even those measures aren't foolproof. "Like any company, we will always worry about a takeover possibility, unless we had more than 50 percent of company stock in friendly hands," Strawbridge said. "If money is no object to a person - and if a company is a public company - it could be bought by anybody," he added. In his previous bid for the company, Baron reportedly had support from institutional investors.
Strawbridge said 44 percent of company's stock is held by company directors, members of the Strawbridge and the Clothier families, and the company's employee purchase plan.
Strawbridge said the company hasn't talked with Baron in more than three years.
Baron declined to comment.
Normally, an investor like Baron must file a document called a Schedule 13D with the SEC within 10 days after buying enough shares to push his holdings in a public company past 5 percent of all outstanding shares. In a 13D, the investor must also tell if he has any takeover intentions.
Baron's last stock purchase, in 1984, brought his holdings to 4.9 percent. But when the company bought a block of 799,500 shares owned by Robert Strawbridge and his family last year, the move pushed Baron's investment past the 5 percent mark.
SEC attorney Joseph Conolly, chief of the office of tender offers, said that in such an unusual situation, the investor must file a 13G form within 45 days of the close of the year in which holdings passed 5 percent. That filing deadline is today. The 13G, unlike the 13D, allows Baron to keep his plans a secret.
In the past, Baron has criticized Strawbridge & Clothier's conservative expansion program for its department stores and Clover discount department store division.
Industry observers say that slow growth has allowed the successful invasion of the Philadelphia market by out-of-town retailers like Bamberger's, Bloomingdale's and Abraham & Straus. Now, some say, Bradlees and Caldor are gaining a toehold because of the slow growth of the Clover store division. Both opened their first stores in the region in 1985. Earlier this week, Clover announced plans for a new store in southwest Philadelphia. There are 12 Strawbridge's department stores and 20 Clover stores.
"We are a conservative company and we grow at the rate that we can maintain control. We don't want to move too far, too fast," Steven Strawbridge said. "We've seen competition come and competition go."
