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Final Hurdle for Macy, Federated Deal Cleared : Reorganization: Merger of retailers will create nation's largest department store firm.

December 09, 1994|From Associated Press

NEW YORK — R.H. Macy & Co. cleared its final hurdle before exiting from bankruptcy when a federal judge on Thursday approved a plan for the renowned retailer to merge with Federated Department Stores Inc.

"I've signed the order of confirmation," U.S. Bankruptcy Judge Burton L. Lifland intoned just before 1 p.m. EST at a hearing, effectively ending Macy's nearly three-year refuge from a legacy of big debts.

Lifland's endorsement was the last significant step before the combination of the former rivals could be completed. The union of Macy and Federated will create the nation's biggest department store company, encompassing more than 335 stores with annual sales exceeding $13 billion.

The retailer known for its Thanksgiving parade and store in Manhattan's Herald Square still has a few loose ends to tie up before the merger can be accomplished, which is expected by the end of the year.

"It is a very bright day indeed," beamed Myron E. Ullman III, chairman and chief executive of Macy's, after the hearing. He said, "Macy's has been restored to financial health and its franchise preserved, saving tens of thousands of jobs at hundreds of department and specialty stores in communities around the nation, while enabling our creditors to be fairly compensated."

Allen Questrom, Federated's chairman, and James Zimmerman, the company's president, said in a statement they believed the merger will create "a stronger competitor and more effective provider of value to our customers in the years ahead."

Federated's purchase of a $449.3-million bankruptcy claim against Macy gave it the leverage to negotiate a merger with its rival.

Creditors will receive about $4.12 billion as Federated pays off Macy's debts after the merger.

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