The waiting is over—maybe.
Federated Department Stores announced on Feb. 21 that it has signed a nonbinding letter of intent with Wayzata, MN-based Business Development Group Acquisitions (BDGA) to acquire its Fingerhut Cos. subsidiary. According to Federated spokesperson Carol Sanger, BDGA is interested in buying all of Fingerhut, including its Arizona Mail Order and Figi’s titles.
The deal is subject to additional due diligence by BDGA and BDGA’s being able to obtain financing. Under terms of the letter, BDGA must notify Federated in early March of its intent and ability to proceed. Subsequent to providing such notice, a definitive purchase agreement would need to be negotiated between the parties. Further terms were not disclosed.
Business Development Group partners Peter Lytle and Marshall Masko were attending a venture capital meeting in Waussau, WI, on Feb. 21 and could not be reached for comment.
“The Fingerhut deal is really a financing play vs. a catalog deal,” says Mike Petsky, CEO of direct marketing mergers and acquisitions firm Petsky Prunier. He believes that BDGA is most interested in Minnetonka, MN-based Fingerhut’s credit business.
“With a billion-dollars-plus of receivables, it’ll be interesting to see who provides financing for this deal,” Petsky says, adding that traditional direct marketing equity firms most likely won’t be interested in providing financing.
Indeed, the transaction is far from a done deal: “We are pleased that we have been able to enter into this letter of intent with BDGA, and although there are no guarantees of a successful outcome, we are hopeful that we will be able to conclude a transaction with BDGA,” Federated vice chairman Ronald W. Tysoe said in a statement. “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.”
Tysoe also said that Cincinnati-based Federated is not actively discussing the acquisition of Fingerhut as a going concern with any other parties, although the sale process remains open. Sanger confirms that Fingerhut is still fulfilling orders and that president Michael Sherman is still handling the day-to-day operations.
In other Federated/Fingerhut news, Jeffrey Sherman, chairman/CEO of Federated Direct, announced on Feb. 21 that he has resigned to accept a post with Limited Stores. Dawn Robertson, who has been Federated Direct’s president/chief merchandising officer since 1999, will now head Federated Direct, which oversees Macys.com and Bloomingdale’s by Mail.