Agencies Frown on Federated/May Debt

Lugo, Denise
March 2005
Investment Dealers' Digest;3/7/2005, Vol. 71 Issue 9, p12
Trade Publication
The article presents information on announcement by Federated Department Stores Inc.'s of its plans to buy May Department Stores Co. for $11 billion in cash and stock. The combined Federated/May would have close to $9 billion in debt. Analysts estimate Federated's credit portfolio at some $3.5 billion and May's at $2.2 billion. They predict that Federated will use this cash flow to pay the cash part of the acquisition. The free cash flow generated by these combined businesses will be sufficient to pay down the debt levels fairly rapidly over a three-to-five-year period.


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