PROFFITT’S TO BUY HERBERGER’S IN $160 MILLION STOCK DEAL
NEW YORK — Proffitt’s Inc. — a department store company that’s been on a buying spree this year — has agreed to buy the 40-unit G.R. Herberger’s department store chain in a stock deal valued at $160 million.
Herberger’s, based in St. Cloud, Minn., will operate as a separate division of Proffitt’s, bringing the Alcoa, Tenn.-based firm’s store count to 181 units in 24 states, with annual sales totaling about $2.3 billion.
Hitting that annual volume would raise Proffitt’s business closer to the size of competitors such as Kohl’s Corp., the Menomonee Falls, Wis.-based department store chain expected to rack up sales of $2.4 billion this year.
The merger, subject to board and antitrust approval, is expected to be completed in early 1997.
R. Brad Martin, chairman and chief executive officer of Proffitt’s, said the addition of Herberger’s “will complement our ‘smaller market’ strategy, where in many cases we are the principal department store.”
Further, he said, Herberger’s units “have virtually no market overlap” with other stores operated by Proffitt’s, and he foresees growth opportunities in the states where Herberger’s now operates: Illinois, Minnesota, Wisconsin, Iowa, Nebraska, Montana, North Dakota, South Dakota, Colorado, and Wyoming.
The Herberger’s deal would be the latest in a string of purchases by Proffitt’s: 38-unit Parisian was acquired in October, 49-door Younkers in February, three-unit Parks-Belk in April 1995, and 28-unit McRae’s in March 1994.
Herberger’s stores are in the Midwest and mountain states, as are Younkers’. The Proffitt’s, McRae’s and Parisian chains are in the Southeast.
In the 12 months ended Aug. 3, Herberger’s had earnings of $9.9 million on sales of $328.5 million.