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May Department Stores Co. to Acquire Marshall Field's
ST. LOUIS -- The May Department Stores Co. announced Wednesday it will pay $3.24 billion in cash to acquire the Marshall Field's department store group and nine Mervyn's stores in the Twin Cities areaMarshall Field's, owned by the Target Corp. of Minneapolis, reported revenues of $2.58 billion and generated $107 million in segment earnings in fiscal 2003. It operates 62 stores primarily in the Chicago, Minneapolis and Detroit metropolitan areas. Locations include its world-famous flagship store on State Street in the Chicago Loop and landmark stores in Detroit, Minneapolis, and suburban Chicago. With the addition of Marshall Field's, May will operate 500 department stores in 39 states, including stores under the Kaufmann's nameplate, which has retail locations in Boardman and Niles, Ohio, and in Sharon, Pa.Under the terms of the agreement, May Co. will acquire all the assets that comprise Marshall Field's, including stores, inventory, customer receivables, and distribution centers in Chicago, Detroit and Minneapolis. May is also acquiring the real estate associated with the nine Mervyn's stores."Our decision to sell Marshall Field's, though not easy, reflects our long-term commitment to create substantial value for our shareholders over time, combined with our responsibility to our team members and the communities we serve," said Bob Ulrich, chairman and chief executive officer of Target Corp. "We believe that the sale of Marshall Field's to The May Department Store Co. as an ongoing business enhances the opportunity for all of our stakeholders to enjoy continued success for many years," he added.Gene Kahn, chairman and chief executive officer of the May Co., said the acquisition "will allow us to combine the best of Marshall Field's and May to further expand and enhance the products and services we can provide to our customers. Among the benefits we see is that this combination will produce excellent economies of scale, improved buying power, and an expanded distribution network," Kahn said.After completion of the acquisition and its integration into May Co., the company expects to realize pre-tax synergies of $85 million in fiscal year 2005, $140 million in fiscal year 2006, and $180 million per year thereafter, officials said. The acquisition is expected to be accretive to earnings per share in fiscal year 2005 and beyond.May Co. will retain the Marshall Field's nameplate and operate it as one of the stand-alone department store divisions under the May umbrella. May also intends to maintain the product exclusives -- such as Frango mints -- that are long-standing traditions at Marshall Field's. Linda L. Ahlers will remain as president of Marshall Field's, and headquarters for the division will remain in Minneapolis.May Co. said it would offer employment to all Marshall Field's associates.The transaction does not require shareowner approvals for either May or Target, officials said.The May Department Stores Co. operates 438 department stores under the names of Kaufmann's, Lord & Taylor, Famous-Barr, Filene's, Foley's, Hecht's, L.S. Ayres, Meier & Frank, Robinsons-May, Strawbridge's, and The Jones Store, as well as 217 David's Bridal stores, 456 After Hours Formalwear stores, and 10 Priscilla of Boston stores. The company's stores operate in 46 states, the District of Columbia, and Puerto Rico."