EBSC-"This is a long way from being over,"
DDN article
MORAINE | The bidding for Elder-Beerman Stores Corp. intensified Tuesday as the Bon-Ton Stores Inc. of York, Pa., offered to buy Elder-Beerman for $7 per share, or $80 million.
The Bon-Ton bid tops the $69 million, or $6 a share, bid by Wright Holdings Inc., a company formed by Minneapolis-based private equity firm Goldner Hawn Johnson & Morrison Inc. The Elder-Beerman board approved the deal with Wright Holdings/Goldner Hawn on June 25, but the acquisition has yet to be accepted by shareholders.
Tim Grumbacher, chairman and chief executive of Bon-Ton, told Elder-Beerman Chairman Steve Mason in a letter that the combination of the two companies would "be in the best interest of both companies' shareholders, customers and employees."
Elder-Beerman said Tuesday it will proceed with the planned merger with Wright Holdings while it opens its books and records to Bon-Ton for further review. Bon-Ton said it is prepared to complete a transaction by Sept. 30, barring any surprises.
Spokesmen for Dan Summers, an Ohio real estate developer whose company EB Acquisition Ltd. initially bid $5.50 a share for Elder-Beerman, declined comment Tuesday. Summers said July 11 he was prepared to increase his bid for Elder-Beerman within 10 days.
Before Tuesday's announcement, Elder-Beerman said it planned to have a shareholder vote this fall on the merger with Wright Holdings. Shareholders controlling two-thirds of Elder-Beerman's 11.5 million shares must approve any merger. The government must OK it as well.
Bon-Ton and Elder-Beerman sell similar goods and operate in similar markets. Elder-Beerman employs 6,100 workers and operates 68 stores in Ohio, Illinois, Indiana, Kentucky, Michigan, Pennsylvania, West Virginia and Wisconsin, while Bon-Ton employs 8,700 workers and has 72 department stores in Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont and West Virginia.
For the 13 weeks ended May 3, Elder-Beerman’s revenues fell 7 percent to $138.6 million from the same period last year, while Bon-Ton’s revenues fell 6 percent to $141.6 million. Elder-Beerman’s net loss for the quarter, was $2.5 million before an accounting change. Bon-Ton’s net loss for the quarter was $2.9 million.
Michael Sweeney, Goldner Hawn's managing director, said his firm remains committed to acquiring Elder-Beerman.
"We have a lot of respect for Bon-Ton," said Sweeney, who is expected to be Elder-Beerman’s chairman if a deal is completed. "We think Bon-Ton is a very credible retailer, but as things sit now, we have a fully financed, fully negotiated signed merger agreement. All of our due diligence is complete, and our interest in buying Elder-Beerman has never been higher."
Sweeney said Wright Holdings still plan to take Elder-Beerman private, keep its headquarters in Moraine and keep its management intact.
Mary Kerr, Bon-Ton’s spokeswoman, declined comment on whether the headquarters would move from the Miami Valley, management would be reorganized or the store's name would change.
Elder-Beerman said in a proxy statement this month that after it announced its agreement with Wright Holdings/Goldner Hawn, the company received a request from "a retailer" to view company documents. Kerr said Tuesday Bon-Ton was not that retailer.
The agreement between Elder-Beerman and Wright Holdings/Goldner Hawn gives it exclusive right to meet or exceed any other offer for Elder-Beerman.
"This is a long way from being over," Sweeney said. "This is going to go on for a while, I’m afraid. I was hoping it wouldn’t, but it looks like its going to go on for a while."
Dan Butler, vice president of retail operations for the National Retail Federation, based in Washington, D.C., said merging Elder-Beerman with Bon-Ton would allow the combined company to negotiate lower prices so that they "can meet or beat prices that they’re larger competitors may have." |
