Federated and May confirm $17bn merger
US department stores unite
US retailers Federated Department Stores and May Department Stores have agreed terms for a merger.
Federated, owner of Macy’s and Bloomingdale’s is committing shares worth $11bn to take over May, as well as assuming $6bn in May’s debt to bring the total value of the deal to $17bn.
The deal, approved by the boards of both companies at the weekend, will establish Federated as a $30bn retailer with more than 950 department stores, as well as approximately 700 bridal and formalwear stores, in 49 states.
Terry Lundgren, Federated’s chairman, president and chief executive officer, said: “This is truly an exciting day in American retailing. Today, we have taken the first step toward combining two of the best department store companies in America, creating a new retail company with truly national scope and presence.”
While no division consolidations or store name changes are planned before 2006, Federated said it is likely that most of May’s regional department stores will ultimately be converted to Macy’s.
Lundgren said: “We have had considerable success in re-branding our own regional stores as Macy’s, so obviously we anticipate continuing this strategy to some extent with our new stores. Operating regional stores primarily under one brand means we can advertise nationally, unlike regional retailers, which is more cost-effective.”
May’s stores include the 62-strong Marshall Field’s department store chain acquired from Target for $3.24bn last year.
John Dunham, May’s acting chief executive said: “In today’s retail environment, competition comes from every conceivable retail format. To succeed, we have to operate more efficiently and compete more effectively against players at all levels of the retail demographic.
“There is no question that this is a bold and exciting move, and one I believe will have a positive impact on competitive retailing for American consumers in the longer term.”
