Macy deal faces N.Y. challenge

August 24, 1994|By New York Times News Service

NEW YORK -- New York State Attorney General G. Oliver Koppell said yesterday that he would oppose the proposed merger of R. H. Macy & Co. and Federated Department Stores Inc. unless Federated agreed to sell all 12 Macy's stores in the New York metropolitan area, including the chain's fabled store in Herald Square.

In a statement that stunned Federated and could bog down the effort to bring Macy out of the bankruptcy proceedings that have already stretched more than two years, Mr. Koppell said he had concluded that the proposed combination would decrease competition in the New York department store market, inevitably resulting in higher prices and fewer shopping choices for New Yorkers.

"We believe there is a way to remove the problem: divest all the Macy's stores," Mr. Koppell said at a news conference in his offices in lower Manhattan. He added that "unless we achieve what we seek to achieve, we will oppose the merger in court."

Mr. Koppell, a newly installed attorney general who faces stiff opposition from three challengers in the Democratic primary next month, was appointed by the state's Legislature last December to serve out the term of Robert Abrams, who retired.

Mr. Koppell said yesterday that he was open to suggestions from Federated on ways to address the problem.

Federated said it was "surprised and disappointed" by Mr. Koppell's statement, but it said that it had held "constructive" discussions with his office recently and that it expected that both sides would keep talking until they resolved the problem.

Federated noted that the Federal Trade Commission effectively cleared the merger last week, after a six-month review of antitrust concerns. Federated said that it believed there were no antitrust barriers to the proposed merger and that "neither the facts nor the law support the attorney general's position in this matter."

Various legal proceedings will tie up the proposed merger until December or so. Federated has said that after all the legal hurdles are cleared it would close or sell at least some stores in those areas where its Abraham & Straus, Stern's or Bloomingdale's stores are within steps of Macy's stores.

In the New York area, Macy has nine stores, in an area stretching from White Plains to Massepegua, N.Y., that are close to an A&S store. Two other Macy's stores compete with Stern's outlets, while a Macy's store on Staten island has no nearby Federated competition.

Mr. Koppell proposed yesterday that Federated sell all of those Macy stores that have a Federated store nearby, except for a Macy's store in Albany that is close to a store in Federated's Jordan Marsh chain.

But a bankruptcy court filing that is expected next week will probably give some indication of Federated's intentions.

Selling Macy's Herald Square store, the nation's biggest-volume retail operation, would be a daunting task, said one industry analyst.

With annual sales of around $400 million, "I don't know who would be able to buy it," said Peter Schaeffer, of Dillon, Read & Co.

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