ShopKo Stores Inc. signed a merger agreement to be acquired by an affiliate of Sun Capital Partners, who -- for the moment -- appears to have beaten out its chief rival, Goldner Hawn Johnson & Morrison, in the race to buy the Midwest-based discounter.

ShopKo originally reached an accord with Goldner Hawn in April for $24 per share, but subsequent bids have driven the price to $29 per share. Both firms topped out at that figure in bids submitted Tuesday, but Sun Capital is also offering a 6 percent per year per share premium to its offer, beginning on Dec. 15 and ending on the closing date of the transaction. Overall, Sun Capital's bid is worth at least $1.3 billion, including the assumption of $415 million in debt.

Goldner Hawn could choose to come back with another counteroffer, but a spokesperson for ShopKo said he did not think that was likely. The deal's closure is now subject to shareholder approval. The date of the meeting has not been determined, the spokesperson said, but the deal is likely to close sometime in the fourth quarter.

Developers Diversified Realty Corp. had been part of an unsolicited offer led by Sun Capital in early October, but was not part of the final offer that ShopKo accepted, contrary to several published reports.

According to a company spokesperson, DDR was brought on to advise Sun Capital on the potential re-use of the real estate. But DDR was not far enough along in the process to feel it could commit to the deal, the spokesperson said. ShopKo wanted a firm offer if it was going to pull back from the Goldner Hawn bid and cancel a pending shareholder meeting. Sun Capital decided to step forward, without its partners, and first offered $26.50 per share before both it and Goldner Hawn upped their bids to $29 per share on Tuesday.

"We continue in the same role as we are evaluating real estate for potential opportunities," the DDR spokesperson said. "We're doing our homework. We have a free look and the first call on what to do, but it's too early for us to make an formal commitment or comment on the potential structure."

DDR is in an "enviable" position, wrote Citigroup REIT analyst Jonathan Litt wrote in a research report this morning. "DDR will only play in the real estate," Litt said. "DDR could minimize its equity in the deal through leverage and bringing in a joint venture partner, such as Macquarie was with Mervyn's."

DDR and Sun Capital previously worked together on the acquisition of the Mervyns chain.

Goldner Hawn and Sun Capital did not return calls seeking comment.

ShopKo is a regional discounter that has been able to holds its own against bigger competitors Wal-Mart and Target. ShopKo operates 137 ShopKo stores and 218 Pamida stores.

Sun Capital's retail holdings include Bruegger's Bagels, Media Play, Mervyns, Levi's Outlet, Docker's Outlet, Nationwide Mattress & Furniture Warehouse, Rag Shop, Sam Goody, Souper Salad, Suncoast Video and Wickes Furniture.

-- David Bodamer