Saks Fifth Avenue Parent HBC Reportedly Wants to Buy Macy's

Posted February 04, 2017

For Hudson's Bay, which runs more than 480 stores around the world, buying Macy's would be a splashy way of expanding in the U.S. New York-based Macy's owns more than 850 stores in 45 states that operate under the Macy's and Bloomingdale's.

"Macy's struggling turnaround and the continued pressure it faces from Amazon make a deal unlikely, Cowen said in the note, adding that Amazon itself could be a potential buyer of the company, given its expansion into physical stores". The report said the talks were still in early stages and may not lead to a deal.

Cowen's Oliver Chen explored the possibility of a Macy's acquisition in a note released this morning before the Hudson's Bay news, and concluded that "a deal could be hard". The company had a market cap of C$1.82 billion (US$1.40 billion) as of Thursday's close. But HBC could issue stock or raise debt using its best real estate, which includes locations like the Saks Fifth Avenue flagship in Manhattan or the Hudson's Bay store in downtown Toronto, as collateral.

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Earlier this week, reports surfaced that Macy's outgoing CEO Terry Lundgren was becoming more willing to sell the store chain he's headed for 13 years to avoid a looming battle for control of its board. Ahead of this latest rumor, Macy's market capitalization was almost $10 billion, while Hudson's Bay was about $1.7 billion.

Macy's does have one highly valuable asset - real estate worth about $20 billion. Already, Macy's has seen major carnage in its stock.

Shares of Macy's are up 7.91% on huge volume and reached an intra-day high of $34.37. Its stock has slumped since.