Byline: Valerie Seckler

NEW YORK — Younkers firmly rejected Carson’s hostile takeover bid of $19 a share Wednesday and voiced its determination to stay independent.
After consulting with its financial adviser, Goldman Sachs, the Younkers board unanimously decided the $19 cash tender offer is “grossly inadequate.”
Unless Carson’s raises its bid, analysts said it was unlikely Younkers shareholders would tender many more shares or that the Milwaukee-based retailer would succeed in placing its three nominees on Younkers’ board.
“Nobody’s going to sell a profitable company below its tangible book value,” said John Curti, analyst at Securities Corp. of Iowa, Cedar Rapids.
Younkers’ tangible book value was $19.42 per share on Jan 28.
Carson’s officials declined to comment on Younkers’ rejection.
Analysts, however, deemed it doubtful that Carson’s would raise its bid substantially without gaining access to Younkers’ nonpublic information to get a better indication of the retailer’s value.
However, Alan Raxter, Younkers’ chief financial officer, said, “We see no reason to open our books to a competitor.”
Tom Gould, Younkers chairman and chief executive officer, said in the statement, “Our board believes that Younkers shareholders are better served as an independent company than anything that would result from Carson’s hostile offer.”
Of Younkers’ desire to remain independent, Curti said, “I think they see themselves in the early part of a three-to-five-year plan to grow the business.”
The deal’s next episode will turn on how many shares Younkers shareholders tender between now and April 5, when the tender offer expires, analysts noted.
“If not many shares are tendered, it’s unlikely Carson’s will get its three nominees on Younkers’ board,” said Curti. “The ball’s basically in Carson’s court to raise the bid or just go away.”
Curti and Philip Abbenhaus, analyst at Stifel, Nicolaus, St. Louis, also noted that Carson’s may sit tight until Younkers’ annual meeting, May 17.
“Younkers’ shareholders will make the ultimate call,” Abbenhaus said. “Younkers has to give its shareholders more value than $19.” That could be done either by continuing to improve its results or by buying back its own stock at around $22 per share.
For his part, Gould said, “Given our recent performance and prospects, we believe that our stock is trading where it is based on the fundamentals, not on the basis of Carson’s offer.”
He added, “Accordingly, Carson’s offer represents an insignificant takeover premium and is a discount to our tangible book value.”
Younkers stock closed at 17 61/64 in over-the-counter trading Wednesday, down 19/64.
“Younkers stock could probably stand on its own at $16-$18 should the offer go away,” said Curti. “Younkers couldn’t say that five months ago when Carson’s made its first bid.”
Commenting that Younkers’ stock hasn’t responded to the $19 bid, staying around 18 1/2, Abbenhaus said, “The value hasn’t been reflected. Maybe no one’s paying attention. This isn’t Federated and Macy’s — it’s not the sexiest marriage.”
— Fairchild News Service