CARSON’S INCREASES OFFER FOR YOUNKERS

Byline: Valerie Seckler

NEW YORK — Carson Pirie Scott sent Younkers a signal Thursday that it’s ready to play ball.
The Milwaukee-based Carson’s upped its cash tender offer for the 53-unit Younkers to $19 per share from $17, after extending the expiration of the original bid twice.
In addition, Carson’s extended the deadline for its latest offer to midnight EST on April 5, from March 28.
Younkers stock, which has been hovering around $18, closed at 18 1/4 in NASDAQ trading Thursday, up 3/8.
Stanton J. Bluestone, president and chief executive officer of Carson’s, said in a statement: “While $19 per share is our best bid based on public information, it is possible we would be prepared to improve our offer if given an opportunity to review Younkers’ non-public information.”
Bluestone added that Carson’s continues “to seek to meet with Younkers management so they could explain why they may be worth more than $19 per share.”
Financial analysts look for Carson’s to eventually raise the $19 bid and for Thomas Gould, Younkers chairman and chief executive officer, to leave the company if Carson’s consummates the deal.
“I think the $19 bid will have to go higher if Carson’s wants to be successful,” said John Curti, analyst at Securities Corp. of Iowa, Cedar Rapids. “I really can’t see the company being sold for less than book value,” which is $20 a share. “An offer of $22 or $23 would probably get the shareholders to vote with their feet.”
“If I’m a Younkers shareholder, it’s worth more than $19,” said Philip Abbenhaus, analyst at Stifel, Nicolaus, St. Louis.
Younkers, based in Des Moines, Iowa, said in a statement that its “board would review the adequacy of the revised bid in the near future.”
“Younkers has to take this one seriously,” said Abbenhaus. “Carson’s has indicated that if Younkers works with them, they may raise the price. Even at $22 to $23 per share, it’s a slam dunk (for Carson’s).”
However, analysts don’t expect Younkers to head to the bargaining table soon.
“My sense from Younkers is that they very much want to remain independent,” Curti said. “I don’t think much will happen till the annual meeting,” which is scheduled for May 17.
Curti also predicted Carson’s will have to sweeten its offer once before the annual meeting to place its nominees on the board. Those nominees would replace Gould, David Hurd and Ferd O. Lawson.
“Carson’s may come up a tad more before the annual meeting, but to get much more Younkers will have to negotiate” and share non-public information, he added.
If the tender offer fails but Carson’s places its nominees on the board, Carson’s still plans to put Younkers up for sale, offering its own bid of $19.
Should both strategies to buy Younkers fall short, Carson’s plans to sell all of its Younkers stock. Carson’s held about 18 percent of Younkers shares as of Feb. 28.
If Carson’s does acquire Younkers, Curti said Gould’s departure “would seem likely, given the tenor of the negotiations.”
“My premise is that Tom Gould won’t be working for Bluestone,” Abbenhaus offered. “Maybe he uses a parachute or maybe Younkers does something in its own right, like going private.”
Abbenhaus said if Younkers earns $1.70 per share this year, a purchase price of $22 to $23 per share would be 13 times earnings. By comparison, the Standard & Poor’s 1995 retail stock price-to-earnings ratio is at 14, and it was 16 last year, he noted.
Younkers has said it’s comfortable with 1995 earnings estimates of $1.80 per share, according to Curti. — Fairchild News Service