Lord & Taylor, Water Tower Place, Chicago, Illinois. According to the Wall Street Journal, Federated Department Stores is in talks about buying Lord & Taylor owner The May Department Stores Co. (photo by Justin Hall, 2003)
NEW YORK - Federated Department Stores Inc. is in talks about buying rival May Department Stores Co. in a deal that would create a huge retailer with $30 billion in combined sales and nearly 1,000 department stores including Bloomingdale's, Macy's, Lord & Taylor and Marshall Field's, a published report said Thursday.
The Wall Street Journal, citing unidentified people familar with the talks, said the discussions are preliminary and are at a delicate stage and cautioned that there is no guarantee a deal will be reached.
It said repesentatves for each of the companies declined comment.
The talks come amid a consolidation drive in the U.S. retailing industry as companies try to reduce costs and gain scale in an effort to compete more effectively with the industry leader, Wal-Mart Stores Inc. Last fall, Kmart Holding Corp. agreed to buy Sears, Roebuck & Co. for $11.5 billion.
The Journal said the value of a possible deal between Cincinnati-based Federated and St. Louis-based May isn't clear.
It said Federated, which has 459 stores including Bloomingdale's and Macy's, has a market value of about $9.7 billion.
May, which operates about 500 department stores including Filene's, Famous-Barr as well as Marshall Field's and Lord & Taylor, has a current market value of about $9.2 billion.
Only last Friday May's chairman and chief executive, Gene Kahn, abruptly resigned and the company named president John Dunham to serve as acting chairman and chief executive while it looks for a successor.
The announcement cited no reason for Kahn's departure.
Kahn, who had been with May in various capacities since 1990, left the company seven months after helping May acquire Target Corp.'s more than five dozen Marshall Field's department stores and nine Mervyn sites for $3.24 billion - a price many analysts called too high.
The Journal said Federated and May held unsuccessful merger talks in 2002 that foundered partly over management concerns.
But it said Kahn's departure could clear the way for Federated Chairman and CEO Terry Lundgren to lead a combined company.
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