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Campeau Gets Federated; Macy's to Buy Bullock's

April 02, 1988|JESUS SANCHEZ | Times Staff Writer

Campeau Corp. won its two-month takeover battle for Federated Department Stores on Friday, but rival R. H. Macy & Co. will walk away with three venerable names in California retailing: Bullock's, its high-brow cousin Bullocks Wilshire, and I. Magnin.

A tenacious Campeau will end up with one of the nation's largest retailers in the biggest non-oil takeover in U.S. history. The Canadian developer agreed to buy Federated for $6.6 billion, and with it comes some "crown jewels" of retailing.

Campeau will acquire such imposing names as Bloomingdale's in New York, Burdine's in Miami and Rich's in Atlanta, but it will also be forced to sell some. In getting financing for the deal, Campeau has, for instance, agreed to sell classic clothier Brooks Bros. to a British firm.

Macy's agreed to buy Bullock's, Bullocks Wilshire and the tony I. Magnin of San Francisco, for $1.1 billion. As a result, it will get a long-sought spot in the lucrative--but highly competitive--Southern California department store industry.

At the Bullock's store in the South Coast Plaza, shoppers were divided over the prospect of Macy's taking over.

"Bullock's is my favorite store. I don't like nice things to change," said Pam Andrusko, 45, a sales manager from Costa Mesa who said she has never been to a Macy's store. "When corporations are bought, people have to pay for them. They do it by taking money out of the business. I think (Bullock's) will change for the worst."

But Lynn Porter, 18, an accountant from Anaheim, was excited. "I like Macy's," she said "There's one in San Francisco and one in New York and it's really neat. But they shouldn't change the name. Bullock's has really established itself--especially here at South Coast Plaza--as a really nice place to shop. Changing the name wouldn't really achieve anything."

There was no official word on whether Bullock's name would be dropped in favor of Macy's, but Bullock's chairman, James E. Gray, said he thinks Macy's should keep it. Gray also said he anticipates few changes immediately.

"I think people are glad to have it finally concluded," he said. "Now we can get on with the transition period and finally reassume business."

Industry experts said that ripples from the Federated takeover will be felt by retailers nationwide and it is likely to shake up things among Southern California department stores and supermarket chains.

Campeau has said it will sell Ralphs Grocery, the only supermarket chain in the Federated collection of stores. The sale of Ralphs, combined with Vons pending purchase of Safeway supermarkets in Southern California, might have an impact on grocery bills throughout the area, analysts said. There was no announcement Friday on how soon Campeau or Federated might move on a sale.

The takeover agreement seemed to provide Macy's and Campeau the parts of Federated they coveted most, analysts said.

"Everybody got a piece of the pie," said retailing analyst Walter F. Loeb at Morgan Stanley & Co., a brokerage firm. "Macy certainly got a reward by getting a presence in a market (Southern California) it was not in before and an upscale specialty retailer."

'Got the Gem'

Campeau, Loeb said, "got the gem of them all--Bloomingdale's. Once you have Bloomingdale's you have the jewel of American retail."

Campeau might expand Bloomingdale's because of its name and reputation, Loeb said.

Campeau agreed to pay $73.50 a share for Federated's 88.5 million shares. The $6.6-billion bid is considered high by many analysts and is $2 billion greater than Campeau's original bid, made in late January.

Macy's seems to have gotten what it wanted most out of a merger with Federated. Macy's chairman, Edward S. Finkelstein, said in a statement: "Acquiring Bullock's and I. Magnin at a fair price is an attractive way to resolve this matter. We are especially pleased with this outcome since they are two of the Federated divisions in which we were most interested. Their acquisition enables us to achieve an important strategic objective--expanding Macy's presence in California."

Much Speculation

Many have speculated on what Macy's will do with Bullock's and Bullocks Wilshire, two highly regarded and successful Southern California retailers. Macy's already operates stores in Northern California.

Thomas H. Tashjian, vice president of retail trade at Seidler Amdec Securities, said Macy's has made a smart move in acquiring the Bullock's and I. Magnin chains rather than starting a new Macy's chain in Southern California. "The department store pie is not broken up into more pieces," he said. "It's nicer to buy a competitor than add a competitor, particularly in a mature business like the department store business."

Macy's is regarded as a savvy and aggressive retailer. But Southern California department store executives did not seem to be worried about having to compete against Macy's.

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