Campeau Has 2nd Thoughts About Selling Off Ralphs

The sale of Ralphs Grocery, once a certainty, appears to be in question now that Robert Campeau has won his battle for Federated Department Stores.

The Toronto developer, who has agreed to pay $6.6 billion for Federated, surprised Wall Street by saying he might not sell Federated’s 129-store Ralphs unit after all, despite earlier indications to the contrary.

When he launched his pursuit of Federated on Jan. 25, Campeau hinted that Ralphs, the Cincinnati company’s sole food division, would be one of the first units sold. Soon after, Federated itself put the supermarket division up for sale. Later, Campeau criticized the company for favoring a $955-million bid by Ralphs management that was lower than at least one other bid, by Lucky Stores, of $990 million.

Even those bids could pale next to one reportedly negotiated at the last minute between Gibbons Green van Amerongen, a Los Angeles investment banking firm, and R. H. Macy & Co., a suitor that for a time was expected to become Federated’s owner. Gibbons Green, according to sources, worked out a deal with Macy’s for a 30-day option to buy Ralphs for $1.1 billion.

Now, however, Campeau has secured an agreement to sell Bullock’s-Bullocks Wilshire and I. Magnin for $1.1 billion to Macy’s, and that cushion of financing has made him backpedal on the issue of selling Ralphs, based in Compton.

“That sale has resulted in us re-examining which assets we will be retaining and which we will be selling,” Ron Tysoe, a senior vice president with Campeau Corp. in New York, said Monday. “Ralphs is a sizable division. It’s no longer obvious that we will be selling it.”

Few Wall Street observers, however, expect Campeau to hang on for long to a food division when his focus is on department and specialty stores.

“We’re as surprised as anyone,” said Ralphs Chairman Byron Allumbaugh. “I have not met Mr. Campeau, but it was my understanding until this statement was made over the weekend that he was going to sell Ralphs.

“I’m sure that this will be resolved in a very short period of time,” he added.

Even advisers close to Campeau were bemused. “Today he says he’s not selling it,” said one Wall Street source. “Who knows what he’ll say tomorrow.”