NEW YORK — Personnel cuts expected from Federated Department Stores' takeover of May Co. won't begin before March 1, 2006.
That disclosure came from the top two principals of the retailers in a letter distributed to associates and filed with the Securities and Exchange Commission on Thursday.
"Federated has committed there will be no workforce reductions or job eliminations as a result of the merger prior to March 1, 2006. In addition to the large majority of the stores, most central and support areas will continue operating beyond the March 1 date, and in a number of areas many of those jobs will become permanent parts of the new organization," the letter said.
"We want everyone at May to be able to take a deep breath and realize that there is time for Federated to learn more about May, and there is time for May associates to learn more about the new company and the potential opportunities it will provide. We hope this announcement is reassuring and allows all May associates to focus on the important task of running a successful retail business during 2005."
The letter was signed by Terry Lundgren and John L. Dunham, who hold the positions of chairman, president and chief executive at Federated and May, respectively.
The biggest cost-cutting opportunity is at May's St. Louis corporate office, which performs financial, credit, personnel, merchandising and other functions. Another big opportunity is at May's regional offices.
Thousands of job cuts are expected, but many May merchants and operational executives are likely to leave before March.
May employs about 110,000 people, including some 6,000 in St. Louis. More than 1,000 of the headquarters employees work at May Department Store International and May Merchandising. MDSI handles private label development largely through imports, and is said to have a team of at least 600 people. Federated has about 112,000 employees.
The merger is subject to shareholder approval and is undergoing Federal Trade Commission review. The deal is expected to be completed in the third quarter of this year, but Federated has begun to determine how the combined entity will operate.
"The transition team, which includes representatives from both companies, is working together to plan for the successful integration of our two outstanding companies by capitalizing on our respective strengths — especially our people," the letter said.
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