Prime Retail becomes rarity a purchaser With acquisition, firm avoids fate of others

June 13, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Abraham Rosenthal has become the rarest of Baltimore businessmen: an acquirer.

But sitting in front of stockholders and employees yesterday before they approved a deal to buy a Michigan company for nearly $1 billion, Prime Retail Inc.'s chief executive didn't sense the oddity of the situation.

"Our focus has been on what's been best for the company and that resulted in the acquisition of Horizon," Rosenthal said. "You can't do a $1 billion transaction just to get bigger."

That Rosenthal didn't link the acquisition of the Horizon Group Inc. with a gain in its corporate stature and place in the Baltimore business community is considered surprising.

The locally based factory outlet center owner is surrounded by once-prosperous local businesses that have been purchased and divided, and their identities eroded: Alex. Brown Inc., USF&G Corp., PHH Corp., Waverly Inc., MNC Financial Inc., Baltimore Bancorp, Noxell Corp. and Loyola Capital Corp., among them.

Prime Retail, by contrast, is growing. With Horizon, the real estate investment trust doubles in size to 49 centers and becomes the world's largest owner and operator of discount shopping centers. Its total market capitalization rises to $2.4 billion, placing it among the top 15 percent of publicly traded real estate investment trusts.

From a psychological perspective, Prime Retail's acquisition of Horizon could provide something just as important: a much-needed boost for the city.

Like Sylvan Learning Systems Inc., Treasure Chest Advertising Inc. and a few others, Prime Retail has emerged as one of the few publicly held, local companies likely to expand and become more entrenched downtown in the 21st century.

"To have them based and remain in downtown Baltimore is important, because they are well-recognized in their industry," said David Frederick, chief operating officer of Colliers Pinkard, a leading local commercial real estate firm. "Had they been acquired, it would be a big loss.

"These days, we're experiencing a sea change in the way companies operate, because of mergers and acquisitions and because of technology," Frederick said. "Because with technology, companies can move wherever they want."

With those changes, Baltimore has evolved from a city replete with corporate headquarters to one where back office operations dominate.

"There's a sense that, here, we're a Baltimore company that's successful, while a lot of other companies around us are being acquired by out-of-town entities," Rosenthal said.

Still, Prime Retail chooses to focus internally.

"When we started 10 years ago, we kept a low profile intentionally," Rosenthal said. "I think you can waste a lot of energy on becoming a big company."

With Horizon, Prime Retail may be forced to look outward and recognize its place among Baltimore businesses.

Prime Retail doesn't plan to dwell on it.

"All I want is to be chasing the next good idea," said William H. Carpenter Jr., Prime Retail's president and chief operating officer. "[The Horizon deal] is done, and now we need to do something else. You either be the lead dog or be a follower. And we want to be the lead dog."

Pub Date: 6/13/98

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