NEW YORK -- R.H. Macy & Co. will entertain a merger proposal this morning from persistent suitor Federated Department Stores Inc., putting Federated's chief executive, Allen I. Questrom, face-to-face with the Macy board for the first...
NEW YORK -- R.H. Macy & Co. will entertain a merger proposal this morning from persistent suitor Federated Department Stores Inc., putting Federated's chief executive, Allen I. Questrom, face-to-face with the Macy board for the first time.
The pitch will come around 10 a.m. in the Macy boardroom at the Herald Square store.
Sources said Thursday that Federated is not expected to come in with a sweetened proposal at this time, and the Macy board is likely to reconvene next week to discuss any possible shifts in strategy, based on the meeting.
Questrom is expected to cover several crucial merger issues, among them: the benefits of creating a $12 billion Federated/Macy operation, including cost savings estimated at $100 million or more; which
Federated divisions would be converted to Macy's; how the merger would be financed; antitrust issues and sell-offs.
Retail experts said Federated's Abraham & Straus division would be a prime candidate for conversion into Macy stores and that Macy stores in Atlanta would probably be sold. May Department Stores and Dillard Department Stores are considered likely buyers.
Questrom could also discuss which buying system would be used in a combined Macy/Federated operation -- Federated's team approach, or Macy's buyer-planner system.
Advertising synergies and the possibility of creating a big national TV ad campaign for Macy's may also be addressed.
One industry expert suggested Federated will argue that Dillard's or May Co. could pursue Macy's, once the company emerges from Chapter 11 and the stock begins trading.
Most members of the Macy board, including CBS chairman Laurence Tisch, are expected to attend. The few who don't will be in touch by telephone.
Questrom will be backed up by James M. Zimmerman, president and chief operating officer; Ronald W. Tysoe, vice chairman and chief financial officer; Thomas G. Cody, executive vice president of human resources, and Karen M. Hoguet, senior vice president of planning and treasurer.
Questrom is said to have already persuaded some Macy board members during private meetings to join Federated's camp. In the last few weeks, there's been a growing feeling in the industry Federated will prevail in its quest to merge with Macy's.
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