Federated sells bridal unit
Firms Split Bridal and Tux Business
By Cotten Timberlake and Dana Cimilluca
Bloomberg News
November 17, 2006, 10:20 AM CST
Federated Department Stores Inc., the second-largest U.S. department-store company, agreed to sell its bridal division in two separate transactions for a total of $850 million.
Buyout firm Leonard Green & Partners LP will acquire 269 David's Bridal wedding gown stores, as well as 10 Priscilla of Boston locations, for about $750 million, Federated said today in a statement. Men's Wearhouse Inc. is buying 511 After Hours Formalwear tuxedo stores for $100 million.
Federated decided to sell the unit to concentrate on its more than 800 Macy's stores. The company acquired the bridal chains through the $11 billion takeover of May Department Stores Co. last year. The Cincinnati-based company converted 400 former May stores to the Macy's name in September.
``It certainly helps Federated move towards the next step of the integration process,'' said Arun Daniel, an analyst with New York-based ING Investments LLC, which manages $40 billion in assets including Federated shares. The value of the deal was in line with investor expectations, he said.
Federated missed its own deadline to announce an agreement by August after putting the stores on the auction block more than a year ago. The company said it expects to complete the transactions in the first quarter of next year.
The Conshohocken, Pennsylvania-based bridal division had sales of $704 million in 2004, the most recent year available. Federated didn't release sales figures today. After Hours is the biggest U.S. formalwear chain.
Federated, which also owns 37 Bloomingdale's stores, rose 6 cents to $42.05 at 9:45 a.m. in New York Stock Exchange composite trading. Before today, it rallied 27 percent this year, more than double the 12 percent gain in the Standard & Poor's 500 Index.
Private-equity firms have agreed to buy about 67 U.S. retailers and restaurant companies so far this year, according to data compiled by Bloomberg.
In the biggest deal, Michaels Stores Inc. agreed in June to a $6 billion buyout by Bain Capital LLC and Blackstone Group LP. Luxury retailer Neiman Marcus Group Inc. was bought a year ago for $5.1 billion by Texas Pacific Group and Warburg Pincus LLC.
Federated sold May's Lord & Taylor division to a group of investors including Apollo Real Estate Advisors LP for $1.2 billion in October.
Federated has been using the proceeds of asset sales, including the disposal of its credit-card accounts to Citigroup Inc., to repay debt incurred in the May acquisition and to repurchase shares.
The sales are part of a consolidation push in the department-store industry that's been driven by sluggish sales. Saks Inc. in September sold its 38-store Parisian chain to Belk Inc., which had bought its Proffitt's and McRae's chains in July 2005.
Bain Capital, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust agreed to buy Toys ``R'' Us for $6.6 billion in March 2005.
Credit Suisse and Banc of America Securities LLC advised Federated on the bridal-business sale.
Copyright © 2006, Chicago Tribune
By Cotten Timberlake and Dana Cimilluca
Bloomberg News
November 17, 2006, 10:20 AM CST
Federated Department Stores Inc., the second-largest U.S. department-store company, agreed to sell its bridal division in two separate transactions for a total of $850 million.
Buyout firm Leonard Green & Partners LP will acquire 269 David's Bridal wedding gown stores, as well as 10 Priscilla of Boston locations, for about $750 million, Federated said today in a statement. Men's Wearhouse Inc. is buying 511 After Hours Formalwear tuxedo stores for $100 million.
Federated decided to sell the unit to concentrate on its more than 800 Macy's stores. The company acquired the bridal chains through the $11 billion takeover of May Department Stores Co. last year. The Cincinnati-based company converted 400 former May stores to the Macy's name in September.
``It certainly helps Federated move towards the next step of the integration process,'' said Arun Daniel, an analyst with New York-based ING Investments LLC, which manages $40 billion in assets including Federated shares. The value of the deal was in line with investor expectations, he said.
Federated missed its own deadline to announce an agreement by August after putting the stores on the auction block more than a year ago. The company said it expects to complete the transactions in the first quarter of next year.
The Conshohocken, Pennsylvania-based bridal division had sales of $704 million in 2004, the most recent year available. Federated didn't release sales figures today. After Hours is the biggest U.S. formalwear chain.
Federated, which also owns 37 Bloomingdale's stores, rose 6 cents to $42.05 at 9:45 a.m. in New York Stock Exchange composite trading. Before today, it rallied 27 percent this year, more than double the 12 percent gain in the Standard & Poor's 500 Index.
Private-equity firms have agreed to buy about 67 U.S. retailers and restaurant companies so far this year, according to data compiled by Bloomberg.
In the biggest deal, Michaels Stores Inc. agreed in June to a $6 billion buyout by Bain Capital LLC and Blackstone Group LP. Luxury retailer Neiman Marcus Group Inc. was bought a year ago for $5.1 billion by Texas Pacific Group and Warburg Pincus LLC.
Federated sold May's Lord & Taylor division to a group of investors including Apollo Real Estate Advisors LP for $1.2 billion in October.
Federated has been using the proceeds of asset sales, including the disposal of its credit-card accounts to Citigroup Inc., to repay debt incurred in the May acquisition and to repurchase shares.
The sales are part of a consolidation push in the department-store industry that's been driven by sluggish sales. Saks Inc. in September sold its 38-store Parisian chain to Belk Inc., which had bought its Proffitt's and McRae's chains in July 2005.
Bain Capital, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust agreed to buy Toys ``R'' Us for $6.6 billion in March 2005.
Credit Suisse and Banc of America Securities LLC advised Federated on the bridal-business sale.
Copyright © 2006, Chicago Tribune
posted by Anonmous at 10:40 AM
0 Comments:
Post a Comment
<< Home