(Direct Newsline) A potential buyer has made a bid for the Fingerhut catalog, and parent company Federated Department Stores is considering the offer, spokesperson Carol Sanger confirmed Friday afternoon. Sanger would not disclose the name of the bidder or the amount. But John Ellenbecker, the mayor of St. Cloud, MN, said in an interview that it is probably Tom Petters or Peter Lytle, the first two suitors to express interest.
Ellenbecker has been in touch with potential buyers since Federated announced its intention on Jan. 16 to sell Fingerhut unless a buyer was found. A third early contender from the region, Paul Ellarby, has dropped out, Ellenbecker said.
Twelve remaining potential buyers have signed confidentiality agreements saying they wouldn’t talk about pending deals, reports said. Observers are wondering if Ted Deikel, former CEO of Fingerhut, will end up running the company again. He reportedly is a partner in Petters’ company, Redtag.com.
“When you look back, it’s not uncommon for the person who built a business to buy it back,” said Maxwell Sroge of Maxwell Sroge Consultants in Evanston, IL.
What price has this first bidder made for Fingerhut?
Ellenbecker understands from talking to potential buyers that it “might be in the $1 billion range.”
“I personally can’t see a price over $500 million,” said Sroge. “I talked to a very well-informed person this morning and he was thinking $400 to $500 million.” Federated bought the Minnetonka, MN-based company three years ago for $1.7 billion.
“Federated hurt that business badly by cutting back and tightening up credit,” Scroge said. “They just didn’t know how to run that business.”
The mayor said he had been approached by Lytle and Petters because “they were both interested in knowing what we could do in terms of potential interest in helping financing a sale.” Ellenbecker added that he had approached the state legislature about financial support or tax breaks. In a deal this big, however, “a municipality is not going to be a very big player,” he said. “Neither the city nor the state are going to be very active.”
The cataloger is the second-biggest employer in the St. Cloud area. Some 2,600 people in the area could lose their jobs if Fingerhut folded, Ellenbecker said.
“Anywhere from $80 million to $140 million could be taken out of our economy,” he added, quoting a just-issued study by St. Cloud State University. “St. Cloud is the hub for Fingerhut activities.”