Hudson's Bay Co has made a takeover approach to US department store chain Macy's Inc, the Wall Street Journal reported Friday, causing shares to rise.
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.
A spokesman for Hudson's Bay declined to comment on the talks, which were reported earlier by The Wall Street Journal. Starboard Value bought its Macy's stake in 2015 and from the start has pressed the company to spin off its real estate holdings.
The idea is interesting in the fact that Macy's absolutely dwarfs the Hudson's Bay Company in size.
BNN speaks with Mark Satov, strategy advisor with Satov Consultants, about reports that Hudson's Bay is in takeover talks with Macy's.
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". Like other brick-and-mortar retailers, the company has struggled in recent years as consumers shifted their spending from physical stores to online merchants like Amazon (AMZN).
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The preliminary discussions are set against the continuing woes of Macy's, the country's biggest department store.
A blockbuster deal in retail could be on the horizon.
Instead, it looks like the beleaguered department store chain might put itself up for sale in a last-ditch effort to send Chairman and Chief Executive Terry Lundgren out without triggering an all-out board war.
Founded in 1670, Hudson's Bay began as a fur trading business and once owned more than 40 percent of what is now Canada. The company had a market cap of C$1.82 billion ($1.40 billion) as of Thursday's close.
It was acquired in 2008 by mall developer NRDC Equity Partners, headed by Richard Baker.
Despite this, Macy's has a reported $7.5 billion debt.