02/21/02 20:52:00 Federated in preliminary deal to sell Fingerhut NEW YORK, Feb 21 (Reuters) - Department store operator Federated Department Stores Inc. on Thursday signed a preliminary agreement to sell its Fingerhut Cos. catalog unit to a turnaround specialist, but left the door open for additional bids. Federated, the parent of Macy's and Bloomingdale's chains, said it has a nonbinding letter of intent that could lead to the sale of Fingerhut and substantially all of its assets to Business Development Group Acquisitions Inc., a subsidiary of a turnaround group led by Minneapolis area businessman Peter Lytle. The deal is contingent on Wayzata, Minnesota-based Business Development Group conducting additional due diligence on the unit and obtaining sufficient financing to complete the transaction. No additional terms were disclosed. Lytle said in a prepared statement that he remains "positive about our ability to complete this transaction." Federated said that by early March, Business Development Group must demonstrate its intention and ability to proceed. Until then, the sale process remains open. "Federated needed to get rid of Fingerhut," said Kurt Barnard, president of Barnard's Retail Consulting Group. "It was probably the most injudicious transaction to begin with and it will be a good thing for Federated to devote its energy to its core business." So far, Federated said there are no active discussions with any other potential buyers of the entire Fingerhut business, but said it would consider selling off the company in parts, if necessary. "The sale of Fingerhut as a going concern remains our top priority and, if a sale is feasible, Federated is prepared to move as quickly as possible to get this done," Federated Vice Chairman Ronald Tysoe said in a prepared statement. Credit Suisse First Boston is advising Federated in the negotiations. Federated said last month it would dispose of its Fingerhut Internet and catalog operations, saying the business no longer had strategic value. The company acquired Fingerhut, which sells products ranging from housewares and apparel to flowers, in March 1999 for $1.7 billion. The purchase was made in a bid to expand sales at Federated's direct-to-consumer units, including Bloomingdale's By Mail and the now shuttered Macy's By Mail. But credit delinquency problems at Fingerhut became a drag on Federated's earnings, prompting speculation from analysts that the retailer would sell the catalog unit. "Federated acquired Fingerhut in 1999 in the height of Internet frenzy," said Mary Brett Whitfield, senior vice president with consultants Retail Forward. "It was a land rush to get online, everyone thought they needed to have multi-channel presence for their customers." Fingerhut sales fell 30 percent to $1.18 billion last year amid an ongoing restructuring of the operation. Federated initially forecast cash proceeds of $1.1 billion to $1.3 billion from selling Fingerhut's assets over the next four years. It planned to use those funds to pay down Fingerhut's asset-backed debt of about $500 million. "Department stores have some major problems that aren't about to go away, like competition from low-price stores like Kohl's , Target and Wal-Mart ," Barnard said. "Fingerhut appeared to be a way for Federated to get into the discount store business through the back door." Federated has a different business model and customer base than Fingerhut. Fingerhut operates catalogs and markets to a cash-constrained customer used to paying for things on an installment plan. "There were a lot of integration issues and when the bottom fell out of the dot-com, Federated was left with a unit that didn't make a lot of sense and took them away from core capabilities," Retail Forward's Whitfield added. Lytle founded Business Development Group, which specializes in turning around troubled corporations. The group typically assists struggling companies with fund raising, acquisitions, crisis management and strategic growth initiatives. Lytle recently left the board of United Shipping and Technology Inc., a company he joined in 1998 to help build new growth initiatives. During his tenure, sales at United Shipping jumped from $1 million to $400 million, according to a company release last year. Shares of Federated closed down 76 cents at $38.64 on Thursday, off a 52-week high of $49.90 per share, up from a year low of $26.05.
Let me tell you a insider secret. lol I used to work for a company called corporate express. They are a NJ based logistic company. They have one of the worlds largest courier/shipping networks and also a office supply division similiar to office depot.A german company called buhrmann was interested in buying corporate express, but did not want the logistic part of the business. So the top guys at the then corporate express shopped around for a small and pretty unknown company to aquire the logistic part of the business.
That is of course united shipping a company with sales less then a million a year. the logistic part of corporate express and united shipping merged and became Velocity express. A company that does well over 500 million is sales a year. So this lyte guy is getting to much credit for helping united shipping grow. All spin...
my friend used to call them "Finger****"...... pardon my graphic comment - just quoting an old friend.... aarrfff - dogman
