Hudson's Bay reportedly approaches Macy's about a takeover

Lucy Hill
February 4, 2017

Hudson's Bay Chief Executive Officer Jerry Storch and representatives for Macy's declined to comment when contacted by Bloomberg. Whether money for a large transaction is borrowed or invested, Hudson's Bay would likely need to make deep cuts to reap an acceptable return on its investment. Macy's later added a Starboard ally to its board. Macy's shares shot up 9% on the news. The company had a market cap of C$1.82 billion ($1.40 billion) as of Thursday's close.

Macy's stock price has plummeted more than 20 percent over the past year - and that's even with today's run-up. Starboard estimates the assets are worth US$21 billion and could be turned into joint-venture real estate income trusts that would create $10 billion in shareholder value. According to recent proxy statement, he could be eligible for a golden parachute worth more than $82 million if Macy's is sold.

HBC's shares (TSX:HBC), meanwhile, were up almost four per cent on the Toronto Stock Exchange, after rising more than six per cent earlier in the day. A Hudson's Bay spokesman told Reuters that it doesn't comment on rumors or speculation. However, one of the reasons why its yield is high is the tumble in Macy's stock price.

In July 2015, Starboard made a public presentation that said the stock market wasn't properly valuing the real-estate assets inside Macy's.

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Macy's was one of the brands owned by Federated, and the whole company was renamed Macy's in 2007 as Lundgren eliminated regional brands like Burdines, Filene's and Marshall Field's.

Last month, Macy's announced its latest wave of cost-cutting. Many other traditional stores that were once retail darlings are also cutting jobs, closing stores, declaring bankruptcy, and in some cases, going out of business. But patience has apparently run out as hedge funds bemoan losses as the entire apparel sector reels from a disappointing Christmas holiday shopping season.

In contrast to Macy's, Saks has opened 2017 with announcements of store openings, including a spate in downtown Greenwich.

Other reports by TheDailyFarc

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