By Dana Mattioli, Suzanne Kapner and David Benoit
Canada's Hudson's Bay Co. has approached Macy's Inc. about a takeover, people familiar with the matter said, as the biggest U.S. department-store chain grapples with disappointing results and restive shareholders.
Talks between the companies are at a preliminary stage and also encompass other ways they could cooperate, one of the people said, adding that a deal for Macy's real estate is also a possibility. Other details of the talks are unclear and it's far from guaranteed there will be any deal.
Hudson's Bay is an acquisition-hungry owner of marquee names in retail including Lord & Taylor department stores and Saks Fifth Avenue. While its market value is dwarfed by that of Macy's -- $1.8 billion compared with $9.8 billion as of Friday morning -- Hudson's Bay could raise equity and debt against its real estate portfolio, which could be worth $14 billion, one of the people said. It could also bring in a partner.
But complicating a takeover, Macy's is saddled with about $7.5 billion in debt.
Macy's has struggled in recent years amid increasing competition from upstarts and as shopping habits change and consumers buy more over the internet. Its stock has fallen more than 50% from the highest level it reached in 2015. In January, Macy's said it would slash more than 10,000 jobs and detailed plans to close dozens of stores after another weak holiday-sales season. It's facing mounting investor pressure to turn around its performance and reverse the stock drop. Starboard Value LP took a stake and a board seat and called on Macy's to hive off its valuable real estate, which the activist investor says is worth more than $20 billion.
Macy's in June said its longtime chief executive, Terry Lundgren, would step down later this year and hand the reins to one of his top lieutenants, current President Jeff Gennette.
Write to Dana Mattioli at firstname.lastname@example.org, Suzanne Kapner at Suzanne.Kapner@wsj.com and David Benoit at email@example.com
(END) Dow Jones Newswires
February 03, 2017 10:33 ET (15:33 GMT)
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