Byline: Valerie Seckler

NEW YORK — Financial analysts said last week they expect Luxottica to consummate its cash tender offer for U.S. Shoe Corp., but only after raising its bid to $25 or $26 per share.
As reported, Luxottica Group SpA, an eyewear maker based in Milan, launched a $24 tender offer on March 3.
U.S. Shoe stock closed at 25 on the New York Stock Exchange Friday, up 1/8.
If it makes the deal, Luxottica plans to keep LensCrafters, U.S. Shoe’s optical chain, and sell the firm’s women’s retailing units — Casual Corner, Petite Sophisticates, August Max and the Casual & Co. outlet stores — plus Capezio and its footwear businesses.
Financial sources projected Luxottica could sell U.S. Shoe’s $1.3 billion women’s retailing business for between $50 million and $100 million. The apparel division reported operating losses of $24 million for the fourth quarter and $59 million for 1994.
Buyers for the division would primarily be interested in the real estate, analysts said.
If Luxottica broke up the women’s apparel chains, analysts said Petite Sophisticate and the outlet stores would probably be the most attractive concepts to buyers.
According to one analyst, Luxottica indicated it may have to keep the apparel division into 1996 in order to improve it enough so it could be sold for the price it’s seeking.
Analysts said a slim possibility of a more complex, negotiated transaction for as much as $28 a share still exists. However, they noted that would require more time and Luxottica’s speedier all-cash offer, which expires March 30, is expected to win over U.S. Shoe’s restless shareholders.
An investment banker familiar with U.S. Shoe’s dealmaking efforts also said he expects Luxottica to complete the offer, even if U.S. Shoe plays hard to get and the eyewear maker has to raise its bid a dollar or two.
Leon Cooperman, whose New York-based investment firm, Omega Advisors, holds a 5.8 percent stake in U.S. Shoe, said: “I know of very few companies that make their best offer in their first bid. Now it’s up to U.S. Shoe’s management to show the company’s value is in excess of $24 per share.”
Cooperman said Luxottica’s offer sets a floor value for any eventual resolution and he supports U.S. Shoe’s efforts to maximize short-term shareholder value.
“Let’s bear in mind that people were saying U.S. Shoe should sell its footwear business for $425 million last August [when Nine West made its initial bid],” Cooperman added. “They held out and it turned out they were right.”
In a recent filing with the Securities and Exchange Commission, Omega said it bought 888,100 shares of U.S. Shoe between Jan. 26 and March 3 at prices ranging from $19 to $25.50 per share. This raised Omega’s holdings to 2.67 million shares.
“Luxottica is in a position to dictate the price because it’s interested in the most valuable part of U.S. Shoe,” said Jeff Stein, an analyst at McDonald & Co., Cleveland. “The $24 bid is a good one for Luxottica and $26 would still be good, but $28 would be a bit of a stretch.”
Susi Belli, investor relations manager at Luxottica, said her company “hasn’t had serious negotiations with anyone yet on the apparel division.”
While Luxottica said in its 13-D filing with the Securities and Exchange Commission that it has had “informal discussions” with potential buyers of U.S. Shoe’s women’s retailing and footwear businesses, Belli noted that the company is required to disclose any formal agreement.
In a related development, U.S. Shoe said on Friday that its board has set April 21 for the control share meeting of its shareholders, required for Luxottica to consummate the deal. The assignment of the voting rights of the shares tendered to Luxottica is a formality, which is addressed at the meeting. However, the magnitude of the rights transferred indicates shareholders’ willingness to tender or support further negotiations.
U.S. Shoe also said it extended the trigger date for its 2-for-1 poison pill to March 16 from March 13.
U.S. Shoe reported an overall net loss of $8 million for the fourth quarter, against earnings of $8.3 million or 18 cents, a year earlier.
The loss of 17 cents per share in the quarter was deeper than Wall Street’s mean estimate of 11 cents.
LIFO credits lifted the net income in the period by 16 cents per share and 37 cents, respectively. The most recent earnings also reflect a charge of 5 cents per share for the closings of 14 Pappagallo apparel stores.
Sales in the quarter climbed 2.3 percent to $684 million from $669 million.
For the year, U.S. Shoe’s earnings were $16.4 million, or 35 cents per share, versus a net loss of $15.8 million. LIFO credits lifted earnings by 7 cents per share in 1994 and 17 cents in 1993.
Year-end sales were off 1.1 percent to $2.59 billion from $2.63 billion.