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Macy’s Board Weighs Federated’s Proposal

NEW YORK -- The board of R.H. Macy & Co. will huddle Friday to consider a merger with Federated Department Stores.<BR><BR>The merger proposal was presented by Allen I. Questrom, Federated's chairman and chief executive officer, to the Macy board...

NEW YORK — The board of R.H. Macy & Co. will huddle Friday to consider a merger with Federated Department Stores.

The merger proposal was presented by Allen I. Questrom, Federated’s chairman and chief executive officer, to the Macy board last Friday, but apparently no agreement was reached.

Other top Federated officials, including James M. Zimmerman, president and chief operating officer; Ronald W. Tysoe, vice chairman and chief financial officer, and Karen M. Hoguet, senior vice president and treasurer, participated in the presentation.

“Federated’s team was very well rehearsed,” said a source. “The presentation was very impressive. Federated wants Macy’s bad.”

A source said the presentation lasted an hour and was followed by a half hour of questions from Macy directors.

After the Federated team left the room, there were reportedly presentations by The Blackstone Group and Merrill Lynch, Macy’s financial advisers, on the value of Macy’s, creditor recoveries, and the market impact of a merger. In addition, Weil Gotshal & Manges, Macy’s law firm, gave an overview of the antitrust implications of a merger.

Later, Myron E. Ullman, Macy’s chairman and chief executive officer, reportedly informed some of his executives that this Friday, the board could decide on whether to file its stand-alone reorganization plan or work on a plan with Federated, leading to a merger.

However, over the weekend, one source close to Macy’s said management is not convinced a merger would be advantageous, and although Macy’s stance has changed from complete lack of interest to devoting some attention to Federated’s proposal, Federated is still the pursuer and it is far from a done deal.

It is expected that communications between Federated and Macy officials will continue this week, but a Macy official said Friday that no formal meetings between the two companies were scheduled.

The official said that some Macy directors still have some questions for Federated. He added it is still Macy’s intention to file a plan of reorganization sometime after Friday. Macy’s exclusive right to file a plan of reorganization expires Aug. 1.

Friday’s board meeting is scheduled for 10 a.m. in the boardroom of the Herald Square flagship.

Sources noted that Macy’s future rests with creditors, who will decide which plan to accept, but a unified Federated/Macy plan could be more appealing because Federated already has a stock trading on the exchange.