Campeau Corporation

Campeau Corporation was a Canadian real estate development and investment company founded by entrepreneur Robert Campeau. It was infamous from its ultimately unsuccessful acquisitions of American department store holding companies Allied Stores in 1986 and Federated Department Stores in 1988. The whole organization soon was mired in bankruptcy and spurred the decline of the regional department store.

Real estate development

Synonymous with its founder, Ottawa-based Campeau was able to construct both office complexes and residential subdivisions to accommodate Canada's rapidly expanding civil service. Campeau Corporation had two main rivals in the residential housing market: Assaly Construction Limited and Minto Developments Inc., the latter owned by the family of future Ottawa mayor Lorry Greenberg.

For many years it was city policy that buildings in the downtown core not be taller than the "Peace Tower" of the parliament buildings. Campeau found this rule to be unnecessary and was drawn into conflict with city council over large high-rise developments such as Place de Ville.

Campeau's real estate development success soon spread outside Ottawa. In Toronto its notable developments included Scotia Tower (the city's second tallest skyscraper) and the Harbour Castle hotel - which helped revitalize the city's waterfront area.

Corporate take-overs

In the 1980s Campeau embarked on a series of leveraged buyouts, first bidding unsuccessfully on the "Royal Trust" company (now part of the Royal Bank). Its founder's brash, confrontational manner made him an outsider to much of the conservative Canadian business establishment.

As his empire expanded, Campeau ventured into the United States, looking for acquisitions that would add shopping mall real estate to his portfolio of assets.

Through massive junk bond LBOs which were at their most popular in the mid 1980s, Campeau he gained control of Allied Stores and Federated Department Stores, owner of Bloomingdale's. Campeau retained famous banker Bruce Wasserstein to assist with the transactions. However, in the overenthusiasm and high leverage that defined banking in the late 1980s, the debt obligations that needed to be covered following the merger were too large and exacerbated by a market downturn that hurt retail sales. Campeau Corporation was unable to meet its debt obligations. Federated and Allied eventually filed for bankruptcy reorganization. The company was eventually acquired by the Reichman brothers who went bankrupt themselves and Campeau Corporation ceased to exist.