Federated Department Stores completed the divestiture of its formal unit Monday (9 April) with the closure of the sale of the After Hours Formalwear chain to Men's Wearhouse for US$67.3m.

The originally agreed upon purchase price of $100m was adjusted downward by $32.7m to reflect a number of items, primarily the retention by Federated of customer cash deposits on rentals to be completed after the close of the transaction.

Federated agreed to sell the 507-unit chain, which includes the Mr Tux stores, to Men's Wearhouse on 17 November, at the same time that it reached an accord to sell its 273 David's Bridal and 10 Priscilla of Boston stores to an affiliate of Leonard Green & Partners, a private equity group.

The sale of David's Bridal and Priscilla for $750m was completed in late January, but consummation of the divestiture of After Hours was delayed at that time when the US Federal Trade Commission asked for a second round of documentation regarding the deal.

Excluding the After Hours units, Men's Wearhouse operates 753 stores under the Men's Wearhouse, K&G and Moores nameplates.

The acquisition of After Hours adds 507 stores in 35 states to the MW lineup and firmly establishes the Houston, Texas-based men's apparel retailer as the largest formalwear chain in the US.

After Hours' exclusive relationship with David's Bridal will continue under the new ownership arrangement and will be extended to both Men's Wearhouse and Moores stores. Further details will be provided when MW reports first-quarter earnings on 22 May, MW said.

Federated acquired David's Bridal, Priscilla, After Hours and Mr. Tux when it bought May Department Stores for $11bn, plus about $6bn in assumed debt, in February 2005.
 
By Arnold J Karr.