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Federated Confirms Offer for Fingerhut

February 9, 2002

MINNEAPOLIS (AP) _ Federated Department Stores Inc. confirmed Friday that it has received one formal offer for its Fingerhut catalog business and that another potential buyer has dropped out.

Federated spokeswoman Carol Sanger would not say who made the offer or divulge financial terms. She said the company was reviewing the offer.

When Federated announced on Jan. 16 that it would close Fingerhut if it couldn’t find a buyer, company officials estimated its assets could be sold for $1.1 billion to $1.3 billion.

Peter Lytle, a businessman with a history of turning around companies with financial problems, earlier said he was among potential buyers looking at Fingerhut’s books. Lytle said Friday that he was prohibited by a confidentiality agreement from disclosing whether he had made an offer for Fingerhut.

Tom Petters, a veteran retailer and chairman of Redtagbiz Inc. in Eden Prairie, also had signed a confidentiality agreement and was looking at Fingerhut’s financials.

``Tom Petters intends to make an offer at some point but he has not made an offer to date,″ said Redtagbiz spokeswoman Mary Pernula.

Sanger has said about a dozen potential buyers have expressed interest in Fingerhut, but she has not said whether they were acting alone or as part of investor groups.

Federated also confirmed Friday that an investment group led by Paul Ellarby of Minneapolis had dropped out as a potential buyer after reviewing the internal financial data.

Meanwhile, union workers planned a bus trip to Federated’s Cincinnati headquarters to put more pressure on the company to sell Fingerhut intact. About 50 members of the Union of Needletrades, Industrial and Textile Employees planned to demonstrate outside the headquarters building Monday afternoon.

In response to the planned demonstration, Sanger issued a statement saying Federated has been working with Credit Suisse/First Boston for the past year to find a buyer for Fingerhut.

``We currently are making a last good-faith attempt to sell this business,″ Sanger said.

She said the Fingerhut catalog business is losing money and is projected to keep doing so.

The union has demanded that Federated rescind 60-day layoff notices sent to about 70 percent of Fingerhut’s employees and continue to order merchandise and publish catalogs while seeking a buyer.

``Those would be illogical and irresponsible actions to take when the future of that business remains uncertain,″ Sanger said.

The union, however, maintains that Fingerhut is profitable.

``We cannot sit idly by while Federated shreds a viable, successful company,″ said Jane Palmbach, representing UNITE Local 978 in St. Cloud. ``We simply demand that Federated follow normal business procedures that are necessary to effectuate a sale.″

Fingerhut employs 4,700 people in Minnesota, including nearly 2,700 in St. Cloud, plus 1,300 in Tennessee.

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