Journal of Financial Economics Vol. 35 No. 1 1994
Campeau's acquisition of Federated
Abstract
This paper updates Kaplan (1989) by comparing Federated Department Stores' value before its purchase by Campeau Corporation to its post-bankruptcy value. The post-bankruptcy value includes all direct and indirect costs of bankruptcy and financial distress. Federated's assets increased in value by 3.1 billion in 1992 dollars(or 1.6 billion in 1987 dollars). This increase is only slightly below that in Kaplan (1989), suggesting that net bankruptcy costs were modest, and, possibly, nonexistent. The Federated purchase illustrates that a highly-leveraged transaction can increase value, but still be unable to meet its debt obligations; and bankruptcy (and financial distress) need not be costly.
- DOI
- 10.1016/0304-405x(94)90020-5
- Volume
- 35
- Issue
- 1
- Pages
- 123-136
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref