Byline: Valerie Seckler

NEW YORK--Luxottica, which agreed Sunday night to buy U.S. Shoe for $28 per share, will quickly try to sell the firm's troubled women's apparel operations after the closing of the deal.
The agreement in principle between the Italian eyewear maker and the Cincinnati-based parent of LensCrafters was reached after Luxottica raised its $1.1 billion bid by $4 per share to $1.3 billion in cash. The deal could be closed in three weeks, saidofficials of both companies.
U.S. Shoe stock closed Monday at 27 1/2 on the New York Stock Exchange, up 1.
Susi Belli, investor relations manager at Luxottica, said Monday that potential buyers of the 1,300 apparel stores, which include over 700 Casual Corner units, as well as Petite Sophisticate, August Max, Casual & Co. and Capezio, "are lining up at U.S. Shoe's door, not ours."
Belli added, however, that after closing the U.S. Shoe deal, "We still intend to sell the apparel business as quickly as possible."
Financial analysts said Monday that a management group, led by division president Michael Searles and backed by Citicorp, was still talking with U.S. Shoe about buying the apparel unit, as were outside investors.
Robert Burton, director of investor relations, U.S. Shoe, said there were more than two potential buyers of the apparel business, which analysts have projected would be sold for around $50 million.
"Talks on the apparel business continued with some intensity through last week," Burton noted.
"We continue to have significant negotiations with qualified buyers," Burton said, adding that "assuming ratification of an agreement with Luxottica, we'd share the information" on efforts to deal the business.
Todd Slater, analyst at UBS Securities, said, "Since there are at least two parties now doing due diligence, the prospects for a quick sale of the apparel business appear relatively good."
Wertheim Schroder analyst Richard Jaffe agreed, saying, "I don't think Luxottica will have to keep it for long since U.S. Shoe has done so much legwork."
"The ideal package for an apparel group buyer would be Casual Corner, Casual & Co. and Petite Sophisticate," while August Max and Capezio could be liquidated and written off by Luxottica, Jaffe added.
While analysts have projected U.S. Shoe's apparel unit could be sold for $50 million or less, an arbitrageur who tracks retailing said, "I could see it going for $100 million."
For an apparel retail operation with sales of $1.1 billion in 1994, "the difference between $50 and $100 million isn't that big a deal," the arbitrageur added. A sale of the apparel chains would be driven by real estate concerns, including decisions about which leases could be broken and which stores could be closed, analysts noted.
Analysts said the widely anticipated $28 price was a good one for U.S. Shoe shareholders, whose stock was at $15-$16 a year ago. It also allows Luxottica to vertically integrate America's dominant optical chain for $825 million or $17.60 per share, after taxes.
"There aren't too many retailers whose stock has performed as well as U.S. Shoe's in the last 12 months," said Jeff Stein, analyst at McDonald & Co. The issue was lifted in March by the sale of the company's shoe unit to Nine West and by Luxottica's bid.
If a definitive merger agreement is signed in the next 48 hours, as is expected by Luxottica officials, and the amended cash tender offer is processed in the usual 10 to 15 days, the deal could be done in three weeks. "If we get 90 percent of the stock, it will be easier to merge; if not, it will take longer," said Belli. "At $28 per share, we believe we'll get 90 percent of the stock."--Fairchild News Service

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