Federated to Pursue Sale Leaseback of Department Store Portfolio?

Chicago Sun Times - September 28, 2006

Federated Department Stores, owner of Macy's and Bloomingdale's, looks ripe to be raided by billionaire corporate raider Carl Icahn, sending the company's stock price to a record Wednesday.

Federated announced on Wednesday that Icahn intends to buy $113.4 million to $500 million of stock, in addition to the 2 million shares he already owns. A $500 million buy would give Icahn about 11.5 million shares of Federated stock, or 2.5 percent, a more than six-fold increase in his stake.

Icahn gained fame and wealth buying big blocks of stock in distressed companies, installing his allies on the board of directors, and forcing executives to cut costs, sell assets and give the rewards back to shareholders.

"Icahn is a guy who shakes up management and demands change," said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm in New York.

Icahn probably sees value in Federated's real estate -- department stores in shopping malls nationwide -- and he will be impatient about unlocking the value quickly, Davidowitz said. Icahn could force Federated to sell many of its stores, lease them back and continue to operate them as department stores, Davidowitz said. Sphere: Related Content