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Published: Sat, February 04, 2017
Economy | By Melissa Porter

Hudson's Bay Makes Macy's An Offer

Hudson's Bay Makes Macy's An Offer

Additionally, we believe shoppers are transitioning away from shop-in-shop brand models - there's no more loyalty - towards curated assortments, which does not bode well for the similarity of all Macy's stores.

Hudson's Bay would face some challenges in absorbing Macy's. That may mean that Hudson's Bay will have to bring in a partner or borrow against more of its real estate holdings. If a deal is in the works, Satov says he'd like to see HBC get rid of some stores and turn them into cash pretty quickly. "The question is whose are they and when does it happen". It's real estate assets are worth about C$11 billion with an equity value of C$6.5 billion. Still, should Hudson's Bay opt to sell some of Macy's less desirable locations, it would have to compete with a flood of properties for sale, as other struggling retailers also shed properties.

"A buyer would likely need to be excited or prepared to execute better than current management", Chen wrote in a Friday note to investors. The fund invested in Macy's in July of 2015, and Smith was reportedly unhappy with Macy's stock's performance. Traditional stores have been forced to respond by trimming their prices, which cuts into their margins.

Starboard held around 1 percent of Macy's stock as of September 30 past year, making it the company's 15th largest shareholder.

Cincinnati-based Macy's shares surged in early morning trading, rising more than 7 percent to $32.95 a share, up from Thursday's closing price of $30. 72.

Talks between the two companies are in preliminary stages, according to the publication, adding a deal to acquire Macy's real estate as one possibility.

Lundgren is set to step down this year, and could earn $80.24 million if there is a change of company control, according to a filing.

Since Smith's July 2015 purchase, shares of Macy's have cratered by almost 60%.

Representatives for Hudson's Bay and Macy's declined to comment.

Trading in Hudson's Bay shares was also briefly halted on the Toronto Stock Exchange.

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