Federated To Buy Fingerhut

Federated, operator of Bloomingdale's and Macy's, said Thursday it's buying direct marketer Fingerhut for $25 per share, or about $1.7 billion, in cash and including debt.

The offer is a 33 percent premium over Fingerhut's closing price of 18 13/16 on Wednesday.

The department store retailer (FD), which has annual sales of over $15.8 billion, said in a release Fingerhut's (FHT) framework for catalog and Internet order fulfillment will provide "an excellent platform for further growth" of Federated's own direct mail catalogs and e-commerce Web site.

"Joining forces with Fingerhut allows us to capitalize on and leverage our own retailing strengths," said Federated's chief executive James M. Zimmerman.

"The acquisition, therefore, will help fuel Federated's potential for continued growth," Zimmerman added.

On a long-term basis, Federated expects the deal to accelerate its future growth and increase its return on investment, the company said.

Fingerhut's own catalog brings in a majority of the company's $2 billion annual sales. Fingerhut also operates the catalogs Figi's, a food and gift catalog, Arizona Mail Order and Bedford Fair, both apparel catalogs, and Popular Club, a membership-based general merchandise catalog.

Besides its own e-commerce Web sites, Fingerhut also has interests in PC Flowers & Gifts, an online provider of flowers and gourmet food and Roxy Systems Inc., an Internet marketer of digital communications and entertainment services, among other sites.

Shares of Federated remained unchanged at 42 1/2 while Fingerhut shares rose 7/8 to close at 18 13/16 Wednesday ahead of the news.

Written By Lisa J Ulmer, CBS MarketWatch