KKR reportedly preparing to bid for Macy’s

by MR Magazine Staff

NEW YORK – The wire services are buzzing today about a report in WWD that Kohlberg, Kravis, Roberts is considering a $24 billion bid for Macy’s. According to WWD, the deal could be completed in principle prior to a series of Macy’s investor meetings, scheduled for Monday.

WWD also reported that the deal would keep current Macy’s management in place, including CEO Terry Lundgren. Macy’s is of course, one of the most well known brand names in retailing, generates cash and owns over half the real estate on which its stores reside.

MRketplace’s mergers and acquisitions expert Allan Ellinger, of Marketing Management Group, reasons that, “Considering the state of private equity today, an eventual deal for Macy’s seems inevitable. They are a logical target due to their size and their real estate values.” However, there are several analysts who are skeptical that Macy’s management would be receptive to an offer, as they are said to want to remain independent.

For many in the retailing community, this scenario is all too familiar and is sadly reminiscent of the 1988 takeover of Federated Department Stores by Campeau, following a battle with then Macy’s chairman Edward Finkelstein, which was lost by Macy’s. However, Federated and Macy’s finally did merge in 1994, setting the stage for even more consolidation. Macy’s subsequently acquired May Department Stores in 2005 bringing the company to its current size. Along the way, dozens of major department store brands that existed in 1988 disappeared including Marshall Fields, Rich’s, Filene’s, Foley’s, Burdine’s, Abraham & Straus and Bullock’s.