Carson Pirie Scott Drops Hostile Bid for Younkers, Supports Proffitt's Offer
Jan. 03, 1996
DES MOINES, Iowa (AP) _ Carson Pirie Scott & Co. said Wednesday it is dropping its hostile bid for Younkers Inc. and will support a richer offer for the Midwest department store chain by Proffitt's Inc.
Carson, which stands to gain $9 million from the sale in its stake in Younkers, separately announced an agreement to buy two Younkers stores in Rockford, Ill., for $5 million.
Milwaukee-based Carson announced in October 1994 that it had acquired 11.7 percent of the stock in Younkers and wanted to buy the Des Moines-based department store chain. Younkers officials resisted, saying Carson's $180 million offer was too low.
The bitter fight led to changes in the Younkers board.
Younkers reached an agreement in October 1995 to be bought by Knoxville, Tenn.-based Proffitt's. Younkers shareholders are to vote later this month on the offer valued at about $230 million.
Carson said it reached an agreement to vote all of its Younkers shares in favor of the Proffitt's purchase. It said it stands to make a profit of about $9 million on its Younkers stock, but that will be offset by about $6 million it spent trying to acquire Younkers.
Younkers was up 12 1/2 cents to close at $25.12 1/2 a share and Proffitt's was down 25 cents to close at $25.75 on the Nasdaq Stock Market. Carson was off 12 1/2 cents at $19.75 a share on the New York Stock Exchange.
Younkers operates 53 department stores in the Midwest, including the two stores to be sold to Carson. Proffitt's has 54 stores in the Southeast, while Carson has 53 stores in the Midwest.
Carson's agreement is contingent on Proffitt's acquisition of Younkers by June 30, Carson spokesman Edward Carroll said. The merger would leave Carson with about 5 percent ownership of Proffitt's. Carroll declined to say whether Carson would keep its stake in the company.
In the battle for control, Younkers chairman, Tom Gould, repeatedly called Carson's offer ``grossly inadequate,'' and said his company should remain independent. But Carson succeeded in ousting Gould and two other Younkers directors in a May 1995 shareholder meeting, in which shareholders also voted to put Younkers up for sale to the highest bidder.
Three Carson-backed nominees were elected to the nine-member Younkers board at the May meeting. Younkers responded by expanding the board to 10 members, reinstating Gould as chairman and refusing to sell the company.
Carson then sued Younkers in Delaware, where Younkers is incorporated. Hearings were held in that case last year, but no ruling has been issued. Younkers said Wednesday that Carson has agreed to withdraw the lawsuit.
``We are pleased Carson has agreed to support our merger,'' Gould said.
Carson's purchase of the Rockford, Ill., stores is unrelated to the merger discussions, officials of both Carson and Younkers said. Younkers operates only one other store in Illinois, near the Iowa border in Moline. Carson has a much bigger presence in Illinois.
``It's just a good strategic fit for them,'' Younkers spokesman Alan Raxter said.