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GREEN BAY, WI-ShopKo Stores executives have received a counter offer to buy the company after Developers Diversified Realty and a group of private equity firms submitted a $26.50-per-share, or about $800-million bid for the chain earlier this month. Goldner Hawn Johnson & Morrison, which submitted the first proposal earlier this year, a $25.50-per-share offer, has now upped its proposal to $27.

Executives have now asked bidders to submit their “best and final offer.” Shareholders will meet on Oct. 26 to vote on the deal.

Joining Developers Diversified in its offer are Sun Capital Partners Group, Lubert-Adler Partners and Elliott Management Corp. Executives at Cleveland-based Developers Diversified are interested in ShopKo after closing on 32 Mervyns department stores last month for $319.1 million with joint-venture partner Macquarie Bank Ltd. Sun Capital and Lupert-Adler are partial owners of the 250-store chain, which they acquired last year with Cerebus Capital Management and Klaff Partners.

Minneapolis-based Goldner Hawn has invested in a number of various companies, including Phoenix-based designer Samuel Lawrence Furniture Co. The private-equity firm has made about $2 billion in transactions since it was founded in 1989.

ShopKo operates 137 of its namesake general merchandise stores, as well as 218 Pamida units, a smaller-format concept in small markets. The retailer’s September sales dropped 4.6%, to $250.7 million, from the same period last year. Its year-over-year same-store sales dropped 4.6% as well.

Boca Raton, FL-based Sun Capital has invested in a number of retail companies. Other than Mervyns, it has stakes in the 250-restaurant Bruegger’s Bagels, and is majority owner of the 900-store Musicland Group, as well as the 69-unit Rag Shops.

Besides Mervyns, Philadelphia-based Lupert-Adler owns shopping centers across the country. In the past, it has also acquired Montgomery Ward and Levitz furniture stores.

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