Federated Inc. Rejects Campeau Offers as ‘Inadequate, Illusory’

Federated Department Stores Inc. today rejected as inadequate a $4.2-billion tender offer from Campeau Corp. and labeled a separate, higher merger offer as “illusory.”

In a statement issued from its Cincinnati headquarters, the company said its board of directors unanimously rejected Campeau’s $47 a share tender offer for all of the retailing company’s stock. Federated stated the board, which met Thursday in New York, viewed the offer as “grossly inadequate” and “an opportunistic attempt” to capitalize on the decline in its stock value since the October market crash by offering a price that fell short of Federated’s underlying value.

The board also said it had considered an alternative proposal from Campeau made Wednesday to pay $61 a share for Federated, a total of about $5.46 billion, if Federated signed a definitive merger agreement by Saturday.

“We note that your new proposal is subject to arranging financing, which has not been obtained to date, and that you have not provided our management with any evidence that your proposal is other than illusory,” Howard Goldfeder, Federated’s chairman and chief executive, stated in a letter to Campeau Chairman Robert Campeau.