Chicago Retailer to Sell Catering Firm, Focus on Its Core Operations
Carson Pirie Scott & Co., Chicago’s second-largest department store chain and a long-time target of takeover speculation, Wednesday announced a radical reorganization plan which would allow it to focus on its core retail businesses.
The company said it agreed to sell its airline catering business to Greyhound Corp., the financial and food services concern, for $390 million and spin off its remaining operations, including its retail operations, into a new publicly traded company.
Carson Pirie said $315 million of the proceeds from the Greyhound deal will be distributed to its shareholders at a rate of about $30 a share and the remaining $75 million will go toward the assumption of various debt obligations and other related matters.
Carson Pirie’s stock rose sharply by $11.38 to $51.88, a new 52-week high, in New York Stock Exchange trading Wednesday.
Analysts have variously estimated the company’s breakup value at $50 to $55 a share.
The businesses to be spun off comprise retail, lodging, floor coverings and information systems. Carson also said it will examine various alternatives for the non-retail operations, including their sale to another company or their purchase by management and employees of the units.
In a statement, the Chicago-based company said: “Carson’s management and board of directors believe that the best business opportunities for the long-term future of our organization are in our core retail service businesses. The best way to create value from those opportunities is to focus our efforts and resources in that area.”
Carson Pirie, whose main competitor in Chicago is Marshall Field, operates 21 fashion-oriented department stores catering to middle to upscale shoppers and more than 300 County Seat specialty retail stores acquired in 1984. Last year it earned $18.7 million on revenue of $1.4 billion.
The divisions being acquired by Greyhound are Dobbs International Services airline catering, Dobbs Houses and Carson International airport terminal concessions.
Carson said the units being sold to Phoenix-based Greyhound accounted for about 30% of its sales and have shown substantial sales and earnings increases over the last few years.
