NEW YORK--Carson Pirie Scott & Co. said Friday that its three nominees for the board of Younkers Inc. have been elected, which raises Carson's chances of taking over its Midwest department store rival.
Carson's announcement was based on a preliminary count of the votes cast by Younkers shareholders, taken by Corporation Trust Co., an election inspector. Carson's reported that most of the shares represented at Younkers's May 17 annual meeting were cast in favor of its plan to auction off Younkers.
Younkers is expected to report the final results of the proxy battle on June 2, when it resumes its annual meeting, adjourned from May 17 pending a certified tally of the votes.
Carson's nominees for the Younkers board are Chaim Edelstein, Alan Cooper and John Burden III. They would succeed Thomas Gould, Younkers chairman and chief executive officer, Ferd Lawson Jr. and G. David Hurd.
Gould would retain his ceo post, but financial analysts expect him to relinquish it and leave Younkers if Carson's nominees are elected.
Although the Carson's slate wouldn't form a majority on Younkers's eight-member board, they would pressure the other directors to put the 53-unit chain, based in Des Moines, Iowa, up for auction.
Carson's has pursued the election of its slate and auctioning of Younkers in the event that its $19-per-share cash tender offer for the company falls short. The offer expires June 6.
As of May 18, Younkers shareholders had tendered about 1.7 million shares or 18 percent of the company's common stock. Carson's holds an 11.7 percent stake in Younkers.
Younkers stock closed at 18, up 1/8, in NASDAQ trading Friday.
Stanton J. Bluestone, Carson's president and ceo, said in a statement, "Younkers' shareholders have unequivocally demanded that the Younkers board start a process which should lead to the sale of Younkers to the highest bidder."
Bluestone added that "the Carson nominees will strongly urge their fellow board members to have Younkers put up for sale."
In response, Gould said in a statement, "It would appear that the three Carson nominees have been elected to the board.
"While we are disappointed, the management of Younkers continues to believe that the auction of the company, given Younkers's turnaround, is not in the best interests of the company and its shareholders and is not supported by the holders of a majority of our outstanding shares."
However, Carson's officials noted that the proxy battle turns on a plurality of shares voted rather than a majority of all shares outstanding.
Gould said, "Unfortunately, only 80 percent of our shareholders voted at our annual meeting. This low turnout had the effect of increasing the significance of Carson's 11.7 percent block of stock."
If Carson's shares in Younkers and those of Younkers's officers and directors were eliminated, two of the three incumbent directors would have been reelected and the nonbinding recommendation to sell the firm would have been defeated, according to Gould.
The Younkers ceo said the chain plans to challenge the preliminary results this week.
Younkers first-quarter earnings surged fourfold over weak prior-year results to $820,000, or 9 cents per share, exceeding Wall Street's estimate of 7 cents.
--Fairchild News Service

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