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Federated/May retail giant

This article was originally published in The Rose Sheet

Executive Summary

Federated Department Stores agrees to buy The May Department Stores Company for $11 bil. in stock, creating a $30 bil. national department store giant that will change the face of prestige retailing. Firms announced the deal, which includes assumption of May's $6 mil. debt, Feb. 28. Closing is anticipated in Q3, after which Federated will operate 950 department stores and 700 bridal and formalwear stores, including May chains like Lord & Taylor, Filene's, Marshall Field's and Hecht's in addition to its own Macy's, Bloomingdale's, Burdines-Macy's and Rich's-Macy's. Merger will improve Federated's national marketing initiatives and offer better merchandise assortment at more competitive prices, firm says. Most of May's regional department stores will be converted to the Macy's nameplate. Federated has begun converting its own regional department stores to the Macy's name. Cost synergies from the acquisition are expected to be $175 mil. in 2006 and $450 mil. in 2007, and deal will be accretive to earnings in 2007...



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