Cincinnati, OH, July 14--With the deal one step closer to completion, Federated Department Stores Inc.'s top executive says he's eager to see rival May Department Stores Co. absorbed into his company, bringing together such names as Macy's and Bloomingdale's with Lord & Taylor and Famous-Barr.
"We believe that this play allows us to compete on a much bigger, broader, national scale," Terry J. Lundgren, Federated's chairman, president and chief executive, said Wednesday after shareholders of both companies overwhelmingly approved the $11 billion takeover in separate votes.
The purchase, announced in late February, will create a retail force with nearly 1,000 department stores and $30 billion in annual sales. Federated owns more than 450 stores under such names as Bloomingdale's and Macy's, while May has about 490 department stores operating under names including Famous-Barr, Filene's and Lord & Taylor. May also owns more than 700 bridal and formal wear stores.
The purchase will result in "one superb national department store," John L. Dunham, May's chairman, president and chief executive officer, told about 50 shareholders at May's meeting in New York. "This is a good, bold, exciting move."
Lundgren told shareholders in a separate meeting that Federated has started customer research efforts to learn about views on May stores and names such as Marshall Field's as it develops the strategy for the combined company. Federated plans to eventually convert many May stores to Macy's as the department store operator accelerates its strategy of creating a nationwide brand that will allow it to expand marketing initiatives. That means May store nameplates such as Hecht's, Foley's and Kaufmann's could soon disappear.
The Federal Trade Commission still must approve the deal, but Lundgren noted that the process appears to be moving normally and he expects the acquisition to close in the third quarter.
"I've got a great sense of urgency," Lundgren told reporters. "I want to get into these stores as quickly as I possibly can."
Still, with painful downsizing in the months ahead as May gets digested, Dunham acknowledged to journalists after the shareholders' meeting that "it's a bittersweet day." He noted it's "a day of mixed emotions."
Company officials declined to comment on store closures or job cuts, but said there won't be any layoffs related to the merger before March 1, 2006. Lundgren said it won't necessarily mean there will be fewer jobs in St. Louis. He said Federated wants to strengthen the Famous-Barr division in St. Louis, but it's too soon to discuss any job numbers.
"We have told everybody there will be no job changes until March next year ... so we get in, we can get to know them, they can get to know us, and we can move forward from there," Lundgren said.
Federated is folding May's St. Louis corporate headquarters into Federated's Cincinnati and New York offices.
Federated announced that 99.88 percent of its shares that voted favored the purchase; 81.3 percent of the company's outstanding shares were voted. For May, about 97 percent of shares that voted favored the move, according to May spokeswoman Sharon Bateman. She noted that 77 percent of outstanding shares were cast.
"We will be much stronger in every aspect of the business than either company could be independently," said Dunham.
The national scope of the company will help Federated better compete with low-price operators like Wal-Mart Stores Inc. at the bottom and upscale retail merchants such as Nordstrom Inc. at the top.
Under terms of the deal, each share of May will be converted into the right to receive $17.75 per share in cash and 0.3115 shares of Federated stock.
