Published: Sat, February 04, 2017
Sci-tech | By Jose Becker

Macy's stock surges after WSJ report of buyout talks

Canadian department store operator Hudson's Bay Co has made a takeover approach to US department store chain Macy's Inc, the Wall Street Journal reported, citing sources. Discussions of acquiring Macy's real estate are also said to be on the table.

Macy's has reported declines in same-store sales, a key retail metric, in 12 of the past 14 quarters. The report said the talks were still in early stages and may not lead to a deal.

So it is no wonder that he wants to unlock more value from the company.

Hudson's Bay could raise equity and debt against its real estate portfolio to fund the deal, according to the Wall Street Journal, which first reported the news.

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Macy's, which also owns the upscale Bloomingdale's chain, has a market value of $10 billion, which would make it a big bite for HBC, whose market value is just under $2 billion.

The company's longtime Chairman and CEO Terry Lundgren is also about to depart the company, handing the reins to Macy's President Jeff Gennette. Starboard Value bought its Macy's stake in 2015 and from the start has pressed the company to spin off its real estate holdings. It was then when the Canadian retailer acquired Saks Fifth Avenue for $2.9 billion. Already, Macy's has seen major carnage in its stock. Macy's shares shot up 9% on the news.

The retailer has been under pressure from activist investors displeased with its stock performance to sell of its stores into a real estate investment trust or look at ways of wringing out money from its physical assets.

Macy's said in March past year it had tapped William Lenehan, a real estate investment trust expert and a close associate of Starboard, to its board.

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