SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
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The Elder-Beerman Stores Corp.
(Name of Subject Company)
The Elder-Beerman Stores Corp.
(Name of Person Filing Statement)
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Common Shares, no par value
(Title of Class of Securities)
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284470101
(CUSIP Number of Class of Securities)
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Steven C. Mason
The Elder-Beerman Stores Corp.
3155 El-Bee Road
Dayton, Ohio 45439
(937) 296-2700
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person Filing Statement)
with copies to:
Joseph M. Rigot
Thompson Hine LLP
2000 Courthouse Plaza N.E.
Dayton, Ohio 45401
(937) 443-6586
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[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
This Amendment No. 1 to Schedule 14D-9 (this "Amendment") amends and
supplements the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed by The Elder-Beerman Stores Corp. (the "Company"), an
Ohio corporation, with the Securities and Exchange Commission (the "Commission")
on September 23, 2003 relating to the tender offer by Elder Acquisition Corp.
("Purchaser"), an Ohio corporation and an indirect wholly owned subsidiary of
The Bon-Ton Stores, Inc. ("Parent"), a Pennsylvania corporation, to purchase all
of the issued and outstanding Shares (including the associated preferred stock
purchase rights) of the Company at a purchase price of $8.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Tender Offer Statement on Schedule TO filed by
Parent and Purchaser with the Commission on September 23, 2003.
This Amendment is being made by the Company in response to an oral
comment provided by the staff of the Commission to the Company on October 1,
2003.
Capitalized terms used but not otherwise defined in this Amendment
shall have the respective meanings ascribed to such terms in the Schedule 14D-9.
The Schedule 14D-9 is hereby amended and supplemented as set forth below.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
The section of the Schedule 14D-9 included under "Item 4" and entitled
"Reasons for the Recommendation of Our Board of Directors" is amended to read in
its entirety as follows:
REASONS FOR THE RECOMMENDATION OF OUR BOARD OF DIRECTORS. Our Board of
Directors approved the Merger Agreement with Parent and Purchaser and the
transactions contemplated thereby, including the first step offer to purchase
all of our outstanding Shares at the Offer Price of $8.00 per Share and the
second step merger with Purchaser, and recommends that all holders of our Shares
accept the Offer and tender their Shares pursuant to the Offer, for the
following reasons:
- Recent and Historical Trading Activity. The $8.00 per Share
price represents a significant premium over the recent and
historical trading prices of our Shares, including:
- a 182.3% premium over the average closing price of
our Shares for the thirty days prior to May 16, 2003,
the date on which we had announced that we were
entering into exclusive negotiations with a third
party relating to our potential sale;
- the following premiums over the per Share prices
derived from the average closing prices for the
periods specified below ending on May 12, 2003, the
date on which we considered two competing proposals
to acquire us prior to entering into exclusive
discussions with one of those parties:
PERIOD PREMIUM
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May 12, 2003.........................159.7%
30-day average.......................193.7%
60-day average.......................212.3%
90-day average.......................220.4%
(which premiums compare favorably with premiums paid
in other comparable transactions); and
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- although (i) prior to August 1999 our Shares traded
at a price in excess of $8.00, (ii) stocks in general
and retail stocks, in particular, have generally
traded at lower levels since that time, and (iii) if
the Offer is consummated our shareholders will not
have the opportunity to participate in any future
stock appreciation that might occur, the Offer Price
is more than a 100% premium to any price that our
Shares have traded at since October 2001 (excluding
prices since May 13, 2003, the date on which the two
competing final proposals for us were considered by
our board's executive committee) and our board
believes that our shareholders should have the
opportunity to accept the Offer.
- Company Operations and Market Price Appreciation. Our board's
judgment, based on its knowledge of our business, assets,
financial condition and results of operations, our competitive
position, the nature of our business and the retail industry
in which we compete and its belief that many of the factors
that may have caused our Shares over the last two years to
trade at price levels substantially below the Offer Price are
not likely to change in the foreseeable future, that the Offer
provides an exceptional opportunity for shareholders to
maximize their investment in us.
- Effect of Sale Process on Our Trading Price. Our board's
concern that, absent our entering into a merger agreement
first with Wright Holdings, Inc. and then Parent, the trading
price of our Shares could return to the levels at which they
were trading over the four years prior to our announcing that
we would be considering a possible sale transaction. The
foregoing notwithstanding, our board also took into account
that our business has shown some improvement in the recent
past and that, as a result of the Offer and the proposed
Merger, shareholders will no longer be able to participate in
any potential future growth. In this regard, it was observed
that, although we have continued to operate at a loss over the
last two and one-half years, there have been a number of
improvements in our financial performance, for example: (i)
through a combination of inventory control, reduction in
capital expenditures, and expenses control, we were able to
reduce debt $17.1 million in fiscal year 2001, $33.4 million
in fiscal year 2002, and $12.0 million in the first six months
of fiscal year 2003 ended August 2, 2003; and (ii) at the same
time, we were able to reduce the net loss (before accounting
changes) in each of these periods when compared with the
comparable prior year period.
- Negotiated and Market-Tested Price. The $8.00 price represents
a negotiated and market tested price, reflecting, in the
board's judgment, the highest price likely to be offered to
our shareholders in a sale transaction. In this regard, our
board considered the efforts taken to maximize shareholder
value, including the solicitation of third-party bids in 2000,
the board's willingness since 2000 to consider any and all
bona fide expressions of interest, the bidding process that
occurred in connection with our entering into the exclusivity
agreement with Wright Holdings, Inc., our announcement on May
16, 2003 that we had entered into exclusive negotiations for a
limited period of time concerning a possible sale, which
alerted the marketplace to the fact that we were considering a
possible sale, and the bidding process that developed between
Wright Holdings, Inc. and Parent.
- Terms of Merger Agreement. The Merger Agreement is
substantially similar to the one previously negotiated with
Wright Holdings, Inc. and will permit our board to consider,
subject to the exercise of its fiduciary duties, unsolicited
proposals that are, or are
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reasonably likely to result in, a superior proposal for us.
Our board also noted that prior to accepting a superior
proposal it would be required to pay Parent up to $3 million
in termination fees (plus an additional $3 million to
compensate Parent for funds paid to the Company upon signing
of the Merger Agreement), which could deter an interested
party from making a superior proposal.
- Consideration of Alternatives. Our board's belief, after
consideration of various strategic alternatives, that a sale
transaction represented the best means for maximizing
shareholder value. In this regard, the board considered, as
discussed above, whether the market price of our Shares was
likely to exceed the Offer Price in the foreseeable future if
we continued as an independent company and whether our book
value could be converted to cash through selected asset sales
or in a liquidation. It also considered that our current
strategic and operating plan was developed and refined over
several years by the board, its committees and management with
the prime objective of maximizing value from operations and
that a wide range of options were considered in that process
including, among other things, a sale of the credit card
business, major cost reductions, different organizational
designs, more rapid expansion, different merchandising
concepts, private label programs and the closing of
nonperforming stores. Some of these were adopted by us and are
part of our current business plan; while others were rejected
because the board determined that they were not likely to add
value.
- Certainty of Value and Timing. The Offer Price consideration
is all cash, which provides certainty of value to our
shareholders, and the Offer affords shareholders the
opportunity to obtain cash for all of their Shares at the
earliest possible time.
- Presentation and Opinion of Financial Advisor. The financial
presentation of RBC, including its opinion dated September 15,
2003 to our board that, as of that date and subject to the
assumptions, qualifications and limitations set forth in its
written opinion that was concurrently delivered to us, the
Offer Price was fair, from a financial point of view, to our
shareholders (see "Opinion of Financial Advisor," as well as
the full text of the RBC opinion contained in Annex B, for the
assumptions, qualifications and limitations set forth in RBC's
opinion, as well as the presentation made by RBC to our board
in connection with its opinion).
The preceding discussion of the reasons for our board's recommendation is not
intended to be exhaustive, but does set forth the principal reasons for the
board's recommendation.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
THE ELDER-BEERMAN STORES CORP.
By: /s/ Byron L. Bergren
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Name: Byron L. Bergren
Title: President and Chief Executive Officer
Dated: October 3, 2003
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