Lytle signs agreement for Fingerhut; Deikel waits in wings

MINNEAPOLIS -- Turnaround specialist Peter Lytle has the early lead in the race to buy and revive Fingerhut Cos. But the company's former chief executive Ted Deikel says he's ready if Lytle can't buy the catalog retailer from Federated Department Stores Inc.

A company led by Lytle, Business Development Group Acquisitions Inc. of Wayzata, signed a non-binding letter of intent Thursday to acquire Fingerhut. Under the terms of that letter, BDGA must notify Federated by early March if it intends to proceed with the purchase.

The companies must also negotiate a price. Federated has previously said it hopes to get $1.2 billion for Fingerhut's assets.

Federated Vice Chairman Ronald Tysoe said there were no active discussions with any other parties regarding a purchase of Fingerhut, but the company is open to other offers.

Deikel and Tom Petters, who work together in Internet distribution businesses in Eden Prairie, said they sent a separate offer to Federated Thursday.

"We don't want closure to be the only option Federated had if the (BDGA) letter of intent is not consummated in a sale," Deikel told the St. Cloud Times.

The offer by Deikel and Petters is good only until March 8. "We don't want to be looking at this 90 days from now," Petters said, noting Fingerhut's customer base appears to be gradually deteriorating.

In January, Cincinnati-based Federated said it would shut down Fingerhut and lay off its 6,000 employees in Minnesota and Tennessee if it couldn't find a buyer.

Minnesota politicians and Fingerhut employees have been pressuring Federated ever since to sell the company rather than shut it down. Federated took preliminary closure steps by halting catalog publications, scaling back hours at phone centers and warehouses and sending out 60-day layoff notices.

Lytle was at a conference in Wisconsin Thursday and wasn't available to comment.

Lytle previously purchased Creamette Co. and Faribault Woolen Mills. His revival of Creamette led to its sale to another company. Faribault Woolen Mills has had more difficulty.

Federated also announced Thursday that Jeffrey Sherman, who has led Federated's catalog and e-commerce division, including Fingerhut, will step down March 1 to accept a position with Limited Stores.