Interco Rejects Buyout Offer

Interco Inc. on Monday rejected as inadequate a sweetened $2.68-billion buyout offer from a Washington-based investor group, and took moves to strengthen its defenses against an unwanted takeover.

The manufacturer and retailer of apparel and furniture stated that in addition to rejecting the $70-a-share merger proposal offered earlier Monday by City Capital Associates, its board of directors approved a plan to sell the company’s apparel division, which accounts for nearly a fourth of its sales.

“The Interco board concluded that the interests of the company’s shareholders were better served by the company’s continued pursuit of the restructuring of the company, which is presently under consideration,” the company said.

Interco stock, which rose by more than $13 a share when the group’s initial offer of $64 a share was announced July 28, rose $4.125 to $72.50 a share on the New York The Interco board also amended its “poison pill” defense against a hostile takeover so that it takes effect if a suitor acquires 15% or more of Interco’s 38.4-million common shares outstanding.

The company said the change was aimed at preventing an open-market stock accumulation program following the announcement of a proposal to acquire Interco or a “street sweep” that could accompany or follow a tender offer.

City Capital owns 8.7%, or 3.14 million, of Interco’s common shares outstanding.

Some of Interco’s well-known brand names include London Fog clothing, Converse shoes and Ethan Allen furniture.