Federated Department Stores' board of directors, meeting in New York on Thursday, weighed a variety of options for avoiding a hostile, $4.2-billion takeover by Canadian real estate developer Campeau Corp. but did not settle on a plan.
"It's a changing equation by the minute," said a Federated executive who asked that he not be named. "Lots of scenarios were considered."
Analysts and sources close to the company said they do not expect the Cincinnati-based retailer, parent of Bullock's department stores and Ralphs supermarkets, to announce a formal plan much before Feb. 5.
After Campeau announced its $47-a-share bid Monday, Federated said it would communicate its opinion of the offer to shareholders no later than that date.
Federated is not expected to be taken over willingly, especially at Campeau's bargain-basement offer, which analysts say is at least $8 to $13 a share less than the company and its valuable real estate and franchises are worth.
Will Meet Again
Federated's 17-member board, which includes 11 outside directors, is expected to meet again next Thursday.
Still the most likely alternative, observers say, would be for Federated to restructure by selling off some divisions, notably Ralphs Grocery, its Compton-based supermarket operation.
Other units that could go, these observers say, are Gold Circle, a discounter; I. Magnin, a San Francisco-based fashion specialty store that has struggled with its image of late, and possibly Foley's, a Texas department store.
The company also owns Bloomingdale's and such highly regarded regional chains as Filene's in Boston, Burdines in Florida and Goldsmith's in Memphis.
Otherwise, Federated might choose simply to rally behind Ohio's tough anti-takeover law, under which it filed suit Tuesday in an Ohio state court against Campeau. The Toronto company filed a response to that suit Thursday, asking that the case be moved to a federal court, spokeswoman Nancy Raeside said.
Federated's only statement after Thursday's board meeting was an official notice of the previously announced promotion of Allen I. Questrom, most recently chairman of Bullock's/Bullocks Wilshire. He has been named vice chairman and a director of the corporation and replaces Donald J. Stone, whose retirement is effective Sunday.
A retail analyst said that, under other circumstances, the promotion of Questrom would indicate that he was in line, along with President Norman S. Matthews, to succeed Federated Chairman Howard Goldfeder. "But that's no longer an issue," said William N. Smith, an analyst with the New York investment house of Smith Barney, Harris Upham. "The Federated Department Stores of six months from now will be a differently configured organization than it is today."
Smith added that Federated is not likely to try to sell off its better divisions--such as Bloomingdale's, where Goldfeder once was a coat buyer, or Bullock's--just to thwart Campeau. "The things that would make them less attractive are the things Goldfeder doesn't want to give up," he said.
For its part, Campeau said Thursday that its Allied Stores subsidiary has signed a definitive agreement for the sale of Dey's, a four-store operation in Syracuse, N.Y., to the unit's management.
Earlier, an agreement to sell the chain to May Department Stores fell through.
That completes Allied's divestiture of more than half its units since Campeau's $3.5-billion purchase of the company just over a year ago. Campeau has used the estimated $1.2 billion in proceeds to pay off much of the debt it incurred in that hostile acquisition. However, observers note that the company is still heavily loaded with debt and might find it difficult to secure financing for a Federated takeover.
Speculation is that Campeau would join forces with another company to complete the deal. One likely source of funds, observers say, is the wealthy Reichmann family of Toronto, which as of Sept. 30 held a 10.5% stake in Campeau.