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JPMorgan Buys Fingerhut Catalogs

By Kris Oser
DIRECT Newsline
Oct 30, 2002

JPMorgan Partners LLC, has bought the remaining Fingerhut Cos. assets from Federated Department Stores Inc., in a nine-figure deal finalized Wednesday.

The new entity, consisting of Arizona Mail Order catalogs and Figi’s catalog is called Crosstown Traders Inc. (DIRECT Newsline broke the news of the deal on Oct. 21.)

Exact terms of the deal were not disclosed, but the price is somewhere between $100 and $200 million, said Claire Gruppo, president and managing director of Gruppo, Levey & Co., a New York investment banking firm, which acted as advisor to JPMorgan Partners.

Steven Lightman heads up Crosstown’s management team as president and CEO. Michael Sherman, who had been previously reported as leading Crosstown, will be vice chairman.

Crosstown is a holding company, which will acquire additional entities over time, Gruppo said.

Arizona Mail Order, headquartered in Tucson, AZ, markets women’s apparel through catalogs Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Brownstone Studio, Regalia, Intimate Appeal, and Coward Shoe.

Figi’s, headquartered in Marshfield, WI, markets food and specialty gift products through its Figi’s and JF Collection catalogs.

These businesses have a combined total of 3.7 million active customers, according to a JPMorgan release.

The only Fingerhut property not included in the deal is Popular Club.

JPMorgan Partners, the equity arm of J.P. Morgan Chase & Co., put up “the lion’s share of the money to buy the company,” Gruppo said. Both Lightman and Sherman put up some money and are equity stockholders in Crosstown.

“Steve is much more of a hands-on operator,” Gruppo said. “He ran Arizona Mail Order for the 20 years before it was acquired by Fingerhut.”

As the deal closed, Lightman was running Arizona Mail Order and Sherman was president of Fingerhut.

Federated announced its intention to shutter Fingerhut catalog and sell the remaining Fingerhut Cos. properties in January.

“Considering that these businesses have been kind of orphaned companies, they have been extremely well-run,” Gruppo said. “They haven’t been starved of cash and have had a completely normal course of business throughout this year.”

Who got the best deal?

“Everybody got a good deal,” Gruppo said. “Federated was able to sell these very good businesses and keep them intact with a fine management team, to a premier private equity group with a great deal of experience and a number of portfolio companies in the direct marketing space.”

JPMorgan, which has invested in direct marketing companies such as 1-800-Flowers, Cabela’s and Cornerstone, is fleshing out its holdings with the Arizona Mail Order and Figi’s investments.

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