Federated OKs Macy’s New Offer

Federated Department Stores Inc. today agreed to a sweetened friendly merger with R. H. Macy & Co., which upped its initial bid by $200 million in cash to $6.3 billion, giving it an edge over hostile competitor Campeau Corp.

Under terms of the amended merger agreement unanimously approved by the Federated board, Macy will offer $77.35 a share in cash for 80% of Federated’s stock, up from $74.50 per share for the same portion in its original offer.

Macy plans to swap shares in a new company--Macy’s-Federated Inc.--and issue convertible debt securities for the remaining 20% of Federated shares. The offer expires on April 4.

Separately, Toronto-based Campeau prepared for a face-off in court late today by extending its competing $6.18-billion tender offer. A federal judge was scheduled to hear suits filed by both sides disputing the other’s bids.

In “consideration” for the improved white-knight rescue, Federated granted Macy an option to purchase its Bullocks-Bullock’s Wilshire and I. Magnin retail divisions if the merger is not successful. Federated said the divisions will sell for at least $800 million and $150 million, respectively.