Hudson's Bay Reportedly in Talks to Buy Macy's

Hudson's Bay Company, the owner of Saks Fifth Avenue and Lord & Taylor, is reportedly in talks to acquire Macy's, the largest department store chain in the U.S. Sources close to the matter said the talks are at an early stage, and may not lead to a deal. One of these sources told The Wall Street Journal that the two retailers are also discussing other ways to cooperate with each other, including a potential real estate deal. Macy's longtime chairman and CEO, Terry Lundgren, is also about to depart the company, handing the reins to current president Jeff Gennette later in the quarter.

Total Retail's Take: A Macy's sale would most likely fend off the advancement of Jeffrey Smith, founder and CEO of New York-based activist hedge fund Starboard Value. As we reported yesterday, Smith is allegedly vying for seats on Macy's board, with a proxy battle looming ahead of the retailer’s annual meeting in a few months. Like Macy's (and most every department store), Hudson's Bay has had its fair share of struggles lately. Last month, Hudson's Bay lowered its fiscal year revenue expectations. Macy's is valued at $9.8 billion, dwarfing Hudson's Bay's $1.8 billion value. Macy's is also burdened with about $7.5 billion in debt — something that could complicate this rumored deal even further.