Analysts Expect Even Higher Bids : Suitors Still Slugging It Out for Federated
Rival suitors Campeau Corp. and R. H. Macy & Co., with more money on the table Thursday, continued their corporate dogfight to acquire Federated Department Stores.
The higher bids will be considered today by Federated’s directors meeting in New York. And Wall Street analysts expect that the price may go up yet again for the giant retailer that owns, among other things, Bullock’s department stores and Ralphs supermarkets.
“This is just a continuing saga,” said retailing analyst Walter F. Loeb at Morgan Stanley & Co. He noted that Federated has changed its bidding procedures to consider further offers from the two bidders until the end of its meeting today.
“Both of them are very anxious to acquire these properties,” he said. “It’s almost at a point of no return for both of them.”
But an end to hostilities may not come today. Industry analysts said they expect that either Macy’s or Campeau would appeal today’s decision if either lost.
Willing to Pay More
During a marathon meeting Wednesday, Federated’s board listened to offers by both Campeau and Macy’s in an effort to end the two-month-long takeover fight.
During the meeting, Campeau offered to raise its bid. The Toronto-based developer said it would pay $74 a share for 90% of Federated’s stock and buy the remainder at $74 after the merger was completed, according to Federated. Campeau had previously bid $82 a share for 80% of Federated and $37 a share for the remaining 20%.
Later, Campeau said it is prepared to abandon its two-step offer and pay $74 up front for all of Federated’s stock, according to documents filed with the Securities and Exchange Commission. However, Campeau said such an offer would require additional financing and more time.
Macy’s, in its proposal before the board on Wednesday, raised its offer and then, on Thursday, raised its bid once more.
The most recent Macy’s offer would pay $78.92 a share--up from $77.35--for 80% of Federated’s stock. For the remaining 20%, Macy’s offered to swap each Federated share for $60 in cash or five shares in the new combined Macy’s-Federated. Macy’s all-cash option might appeal to stock speculators who had favored Campeau’s previous all-cash bids.
Analysts estimated Macy’s most recent offer was worth $6.8 billion, compared to $6.6 billion for Campeau. Campeau officials declined to comment on the most recent Macy’s bid.
On the New York Stock Exchange, Federated shares rose $2.25 to close at $72.50 on Thursday.
Besides Ralphs and Bullock’s, Federated owns such department and specialty store chains as Bloomingdale’s, I. Magnin, Filene’s of Boston, Rich’s and Main Street.
Macy’s owns nearly 100 department stores.
Campeau, which owns Allied Stores, and Macy’s have said they intend to sell off Ralphs Grocery. In addition, Federated has granted an option to Macy’s to buy Bullock’s, Bullocks-Wilshire, and I. Magnin.
