Campeau Says It’s Prepared to Revise Offer for Macy’s
Campeau Corp., battling R. H. Macy & Co. for Federated Department Stores, said Wednesday that it is prepared to revise its $6.18-billion offer for the retailer--but stopped short of officially raising its bid.
And, in a lengthy letter to Federated’s board of directors, Canadian real estate developer Robert Campeau lambasted a combined Macy’s-Federated and warned that it would be weighed down by a heavy amount of debt. He also described sales estimates for the merged company as “unrealistic and misleading.”
Campeau’s announcement came as Wall Street awaited word from U.S. District Judge Leonard Sand, who is expected to rule this week on lawsuits that Macy’s and Campeau have filed against each other. Sand has said he is waiting for an advisory opinion from the Securities and Exchange Commission to aid him in his decision.
Some analysts agreed with Campeau’s financial critique of a merger between Macy’s and Federated, which owns Ralphs supermarkets and Bullock’s department stores.
“I think that the numbers that were thrown out for Macy’s and Federated sales could be very optimistic,” said Linda R. Morris, a retail analyst with Provident National Bank in Philadelphia. “It sounds to me that he (Campeau) has a better grip on the future look,” Morris said. “Maybe Macy’s is looking at past records.”
Campeau, in his letter, said, “we are prepared and able to pay $68 a share across the board . . . and we are able to pay promptly.” Under its current bid, Campeau would pay $75 a share for about 80% of Federated and $44 a share for the remainder.
Macy’s is now offering $77.35 a share for 80% of Federated’s stock. The remaining Federated shares would be exchanged for shares in the merged company.
“I do not like a two-tier offer,” Campeau said. “That’s playing the arbitrageur game.” He then asked to meet with Federated’s board to arrange a merger agreement.
Macy’s and other critics say Campeau’s offer forces shareholders to turn in their shares for fear of receiving $44 a share instead of $75.
“He’s just trying to appeal to the judge,” said one arbitrager of Campeau’s announcement. “He just wants to look less coercive. It’s just a game.”
Campeau’s statement seemed to have little effect on Federated stockholders. Federated shares rose only 25 cents to close at $65.875 on the New York Stock Exchange.
Campeau noted that a combined Macy’s-Federated would be burdened by an $8 billion debt and annual interest payments of $1.1 billion. “To attempt to combine Macy’s and Federated . . . is to create a corporation dangerously leveraged,” Campeau said.
Campeau also vowed to fight Federated’s decision to let Macy’s buy Bullock’s and Bullocks Wilshire for at least $800 million and I. Magnin for a minimum of $150 million--prices Campeau considers too low. Campeau said he believed I. Magnin was worth at least $250 million and that his current bid for Federated values Bullock’s at $925 million. “In any event, we do not intend to sell Bullock’s,” Campeau said.
