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Federated to Buy May Department StoresPOSTED March 1, 2005 Two of the largest department store companies are set to become one after Federated announced a deal to purchase May Department Stores of St. Louis. The deal is worth $17 billion in cash and stock. Federated, headquartered in both Cincinnati and New York, operates 458 department stores in 34 states under the Macy's and Bloomingdale's names. It had sales in 2004 of $15.6 billion. The deal will establish Federated as a $30 billion national retailer with stores in 49 states, Guam, Puerto Rico and the District of Columbia. The merged company will become a powerhouse in retailing as it fights off the growing number of discount stores such as Wal-Mart and Target as well as specialty stores like Kohl's and the Gap. May's runs 491 department stores under the names Filene's, Lord and Taylor, Hecht's, Kaufmann's, Marshall Field's and others. It also owns the David Bridal's wedding chain. The company had sales of $14.4 billiion. Many of these stores will likely be converted to the Macy's name giving it a national identity but at the expense of regional history. "This is truly an exciting day in American retailing," said Terry Lundgren, Federated's chairman, president and chief executive officer. "Today, we have taken the first step toward combining two of the best department store companies in America, creating a new retail company with truly national scope and presence." "In today's retail environment, competition comes from every conceivable retail format. To succeed, we have to operate more efficiently and compete more effectively against players at all levels of the retail demographic," said John Dunham, May's president and acting chairman and chief executive officer. "There is no question that this is a bold and exciting move, and one I believe will have a positive impact on competitive retailing for American consumers in the longer term." The merger will undoubtedly lead to layoffs and possibly store closings. May has 132,000 employees in 46 states and Federated has 111,000 workers. |
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