Hechinger denies deal with Sears Rumors of takeover spark heavy trading in hardware chain

April 30, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

It's the rumor that won't go away.

Breaking its silence, Hechinger Co. yesterday flatly denied the tTC often-repeated speculation of a takeover by Sears, Roebuck and Co.

The latest stirrings of a Hechinger-Sears deal arose from a report yesterday by CNBC correspondent Dan Dorfman, who did not cite any sources but said that Sears is apparently on a "hardware kick."

The report generated an immediate reaction on Wall Street.

The stock of the Landover-based home improvement chain swung wildly throughout the day, opening at $3.56 and shooting up to $5.63 before settling at $4.75, up $1.19.

The company's A shares were the most active on the Nasdaq market, with 6.5 million trading hands.

Hechinger, which has a policy of not commenting on rumors, made an exception yesterday as its stock shot up. "Hechinger Co. is not in discussions with Sears, Roebuck and Co. relating to the possible acquisition of the company," it declared.

Sears, the giant department store chain, responded: "We do not comment on rumor or speculation," spokeswoman Linda Blakley said.

W. Clark McClelland, Hechinger's executive vice president, said "You'll have to ask Mr. Dorfman," when asked where the rumors were generated.

The company said it broke its policy of not commenting on rumors of acquisitions because, "unfortunately, a recent commentary causes the company to believe that this policy may not be in the best interests of its share- holders in this circumstance."

Analysts who track Hechinger were not convinced that a deal is in the offing.

"I think it's much ado about nothing," said Donald T. Spindel of A. G. Edwards & Sons Inc.

Yet Hechinger's stock continues to react to the speculation. In late January, the stock jumped 24 percent after Hechinger was rumored to be an acquisition target.

Hechinger has 118 stores in 21 states and Washington and has been in a protracted slump. Last month the retailer reported a loss of $77.6 million for the past fiscal year. Sales in stores open at least a year -- a key industry gauge -- have not increased in 12 months.

Pub Date: 4/30/96

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