CARSON’S MUST SWEETEN OFFER FOR YOUNKERS, SAY ANALYSTS

Byline: Valerie Seckler

NEW YORK — Carson Pirie Scott’s bid to buy Younkers is dead unless it raises the ante, analysts said Wednesday after Carson’s extended the expiration of its $17-per-share offer for the second time in two months.
The cash tender offer expires March 28, instead of today.
“If Carson’s wants to do the deal, they’re going to have to raise the price,” John Curti, analyst at Securities Corp. of Iowa, said.
Jeffrey Branman, managing director at Financo Inc. investment bankers, said, “Until Carson’s raises its offer, it’s a joke. Given that Younkers has been trading at $18, and Tom Gould pulled out a good Christmas, it’s clear the stock’s worth more than $17.”
Thomas Gould is Younkers’ chairman and chief executive officer.
Younkers stock closed at 18 1/8 in NASDAQ trading Wednesday, up 1/8.
In addition, Carson’s said that 424,196 shares, or 4.7 percent of Younkers common stock, had been tendered as of Feb. 28, down from the 1,636,003, or 18 percent, tendered as of Feb. 2. This reduces Carson’s Younkers holdings to about 17 percent from 30 percent.
Edward Carroll Jr., executive vice president of marketing at Carson’s, said of the withdrawn shares: “Most people don’t tender until the expiration date approaches. The majority of the first 18 percent tendered came on the last day.”
Gould, in a statement, said he believed Carson extended its offer early “so that it could attempt to belittle the significance of the small number of shares tendered.” He said, “We remain steadfast in our belief that its $17 offer is grossly inadequate.”
Curti contended that Younkers’ “fourth-quarter margins held up better than expected, and its improved operating numbers make it obvious the company’s worth more than $17 per share.”
As reported, Younkers’ fourth quarter and yearend earnings per share beat Wall Street consensus estimates by 8 cents and 7 cents, respectively.
Analysts predicted Carson’s will either place three nominees on Younkers’ board and try to negotiate a higher bid or abandon its effort to buy Younkers.
“If Carson’s is serious about placing people on Younkers’ board, I’d have to think they’d be serious about raising the offer — unless they’re thinking about spooking them into someone else’s arms and making a profit that way,” said Curti.
Should the latter occur, Curti said Dillard’s and May Co. have been mentioned as being interested. “Possibly Mercantile would be interested,” he added. “The question is whether they would want to enter some smaller markets, ahead of the competition.”
— Fairchild News Service

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