Department Store Chain To Divest Three Ny Stores As Part Of Acquisition
Attorney General Spitzer today announced a settlement with Federated Department Stores, Inc., requiring the divestiture of three department store properties in New York State.
The stores to be divested are located in Albany and on Long Island. The divestitures are the result of an investigation by New York and other states that began early this year after Federated, the nation's largest department store chain, announced its agreement to purchase its longtime rival, May, the second largest department store chain.
Federated operates both the Macy's and Bloomingdale's chains, among many others. May stores include Lord & Taylor, Filene's and Marshall Fields. After the merger, the combined entity, which will be known as Federated will control over 850 department stores nationwide. The transaction closed today, before trading began on the New York Stock Exchange.
"For consumers at three of the state's leading malls, this transaction would mean the end of department store competition," Spitzer said. "With the divestitures, consumers will benefit from the lower prices, greater choice, and increased services that will result from the competition generated by placing the divested department stores under new ownership."
The malls affected by the merger are as follows:
- The Walt Whitman Mall in Huntington Station, Long Island, where post-transaction Federated would own Macy's, Bloomingdale's and Lord & Taylor, three of the mall's four conventional department stores.
- The South Shore Mall in Bayshore, Long Island. After the transaction, Federated would own the mall's only two conventional department stores, Macy's and Lord & Taylor.
- The Crossgates Mall in Albany, New York. Federated will now control both conventional department stores currently operating at this mall: Macy's and Filene's.
Under the terms of the settlement entered into by Federated and the New York State Attorney General and the Attorneys General of the States of California, Massachusetts, Maryland and Pennsylvania, post-transaction Federated must divest 26 identified stores in the five states that signed the agreement. The settlement requires Federated to give priority for the purchase of these stores to any competing department store chain that submits a qualified offer for the locations, or to any mall owner/developer that is ready to lease or sell the location to a competing department store. To assure competition from conventional, full-service department stores, Federated must accept a qualified offer from these entities even if Federated receives a higher offer from a non-department store.
As provided in the agreement, Bon Ton, Elder Beerman, Boscov's, Dillards, Gottshalls, Nordstrom, Neiman-Marcus, Saks Department Store Group, Belk's, Proffitts, Mac Raes , and Von Maurs may avail themselves of the opportunity to buy the divested mall locations. The Attorneys General may also add other chains willing to operate a full-line department store at the covered malls. The agreement further requires any competing department store acquiring a divested location to operate it as a department store for at least seven years, thus encouraging vigorous competition in the malls for years to come.
Federated must secure all offers for the locations to be divested by February 1, 2006 and must notify the winning offerors by no later than March 1, 2006. The Attorneys General have the right to monitor the sale of the divested locations closely.
The investigation was conducted by Assistant Attorneys General Peter D. Bernstein, Linda J. Gargiulo, and Richard E. Grimm of the Attorney General's Antitrust Bureau, under the supervision of Bureau Chief Jay L. Himes.