Bidding for Elder-Beerman

The Elder-Beerman Stores Corp. (Dayton, Ohio) announced Tuesday night that rival bidder Wright Holdings Inc. submitted a buyout offer of $7.05 a share, narrowly topping the offer earlier this week from The Bon-Ton Stores Inc. (York, Pa.) of $7 a share.

The offer from Wright Holdings, a subsidiary of private equity investor Goldner Hawn Johnson & Morrison (Minneapolis) — apparently submitted close to a late-Tuesday deadline — equals about $82.8 million, while Bon-Ton's equals about $80 million.

Elder-Beerman said Bon-Ton can still raise its offer. It did not say whether there was a deadline.

Elder-Beerman has 68 stores in the Midwest and South. It operates traditional department stores in small to mid-size markets, the same strategy as Bon-Ton. A buyout of Elder-Beerman would double the size and greatly expand the geographic reach of Bon-Ton, which has 72 stores in New England and the mid-Atlantic region. But it would also add to Bon-Ton's debt, as the company lacks the free cash to pay for the deal outright. Bon-Ton officials have said they have financing lined up to back their offer.

Bon-Ton would also have to find ways to wring a profit from struggling Elder-Beerman, which has not ended a year in the black since fiscal 1999. The Ohio chain lost nearly $2.5 million for the quarter ending May 3, 2003, and nearly $14.2 million for the year that ended February 1. Elder-Beerman's monthly sales fell nearly 10 percent in August, while same-store sales dropped 9.5 percent, a month in which many retailers — including department store chains — saw sales benefit from back-to-school shopping.

Wright Holdings is headed by Elder-Beerman ceo Byron Bergren and cfo Edward Tomechko. In July, it had initially offered $6 a share, or $69 million, for Elder-Beerman — an offer the retailer's board of directors first accepted, then abandoned last week for Bon-Ton's higher bid.