After 115 years in business, Woodward & Lothrop Inc. agreed yesterday to be bought by a group led by Federated Department Stores Inc., the giant retailer that swallowed R. H. Macy & Co. in December.
Woodies, which has operated under Chapter 11 bankruptcy protection since January 1994, said the deal includes the purchase of most of its assets, including at least 11 Woodies stores and the flagship John Wanamaker store in downtown Philadelphia.
Woodward & Lothrop said the deal, including the liquidation of assets not purchased by Federated, would generate a projected $640 million. The company had $863 million in liabilities as of April 20.
"While we would have much preferred to continue operating the stores ourselves, the sale of the company will result in significantly greater value than a stand-alone plan," said Robert B. Mang, chairman and chief executive of the Alexandria, Va., based company.
Whether the Woodies name would survive or how many employees might be kept remained unanswered yesterday.
The fate of Woodies' distribution center in Baltimore and its three area department stores -- in Columbia, White Marsh and Annapolis -- were up in the air as well. Combined, they account for more than 1,000 of the company's estimated 9,000 employees.
More details are expected, possibly within days, after a finalagreement is reached between Woodies and the four-member group led by Cincinnati-based Federated.
The group also includes Pennsylvania-based retailers Strawbridge & Clothier and Boscov's Department Stores Inc. as well as the Rubin Organization Inc., a Philadelphia-based real estate developer.
Although the two sides are close to clinching the deal, some analysts speculated that another bidder could emerge. "I think May Department Stores is ready to spring for a competitive bid," Peter Chapman, publisher of Bankruptcy Creditors Services, told Bloomberg Business News.
The deal, which is subject to bankruptcy court approval and other regulatory and legal requirements, has been endorsed by thedirectors of Woodies and Wanamaker and the committee representing unsecured creditors.
Federated said yesterday that it has reached an agreement to purchase at least 11 of Woodies' 15 department stores, which could include those in the Baltimore area, as part of a plan to expand the company's Macy's division in the Washington/Baltimore market.
"This acquisition is a natural extension of our presence in this very desirable market, as well as a way for us, in one stroke, to strategically achieve meaningful coverage for our stores in the Washington and Baltimore areas," Allen Questrom, Federated's chairman and chief executive, said in a statement.
Federated has also tentatively agreed to purchase the John Wanamaker department store in downtown Philadelphia.
John Wanamaker, a Woodies subsidiary, operates 14 stores in Philadelphia, New Jersey and Delaware.
Woodies, which also operates four specialty home furnishing stores and three clearance centers in Maryland, Washington and Virginia, struggled under heavy interest payments after A. Alfred Taubman bought the chain in a $230 million leveraged buyout in 1984. Mr. Taubman spent an additional $183 million to acquire the Wanamaker stores in 1988.
Federated generates more than $14 billion in annual sales from 354 department stores, including Bloomingdale's, and more than 100 specialty and clearance stores in 35 states.