HBC reportedly makes takeover approach to Macy's; shares rise

Canada's Hudson's Bay Co. has approached Macy's Inc. about a takeover, people familiar with the matter said, as the biggest USA department-store chain grapples with disappointing results and restive shareholders.

Macy's shares were up 6.45% to $32.70 in mid-day trading.

The report also states that the two companies are exploring additionally ways to cooperate outside of a merger, including Hudson's taking on some of Macy's real estate portfolio. At Hudson's Bay, a sprawling business that includes Saks Fifth Avenue and Lord & Taylor, things weren't quite as grim, but holiday results still suggested that the company is still facing some challenges in connecting with shoppers. The department store world has been pummeled by a host of major changes in shopping patterns: Much of our spending is moving online, and these businesses have struggled to grab market share in that arena.

The Associated Press says, "The reported talks come as Macy's faces pressure to turn its business around after struggling with a string of quarters of sluggish sales and stiffer competition".

Hudson's Bay Company is among the list of companies that Macy's Inc may be interested in selling itself to. Right now, the company has an enterprise value of around $16.0 billion.

Outgoing Macy's CEO Terry Lundgren is retiring from the top spot this year but will stay on as chairman.


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. It was then when the Canadian retailer acquired Saks Fifth Avenue for $2.9 billion.

Hudson's Bay is quite a bit smaller than Macy's on some key measures.

That same year, the company formed two real estate joint ventures, US -based Simon Property Group Inc and Canada's RioCan Real Estate Investment Trust.

With a 4.9% dividend yield, Macy's Inc (NYSE:M) stock has some quite attractive dividends.

Activist investor Starboard Value held around 1 percent of Macy's stock as of September 30 past year, making it the company's 15th largest shareholder.

A takeover of Macy's may placate activist investor Starboard Value LP, which has been pushing the retailer to wring more money from its real estate portfolio and consider forming a REIT.

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