NEW YORK -- R.H. Macy & Co. and Federated Department Stores Inc. might be edging closer to a merger.
On Friday, July 1 -- a day after Macy's is scheduled to file its reorganization plan -- Allen I. Questrom, Federated's chairman and chief executive officer, will make a sales pitch to the Macy's board on how he would merge the two companies, a source said Monday.
Macy's decision to hear Questrom's case for combining the two chains reportedly was made Monday morning during a scheduled board meeting.
A Macy's official on Monday claimed no knowledge of any upcoming meeting with Questrom but did say that Macy's has requested additional information from Federated about its merger plans.
The Macy executive noted that meetings with Federated officials are ongoing but are not negotiations for a possible merger. The official characterized them as "a sharing of information through ongoing listening sessions."
Questrom's pitch is likely to focus on the perceived benefits of a combined Federated-Macy operation, including cost savings through consolidations, and increased buying power.
Federated has already made a $3.8 billion proposal for reorganizing Macy's. Questrom will undoubtedly pitch that proposal as the one bringing more value to creditors. There has been speculation that Federated might come up with a higher offer.
Macy's has made a $3.9 billion reorganization proposal and has the exclusive right to file a full reorganization plan until Aug. 1. Macy's plans to file its plan in bankruptcy court on June 30.
July 1 could be significant. It would mark Questrom's first appearance before the Macy's board. Behind the scenes, he's met with some Macy's management and board, including Myron E. Ullman, Macy's chairman and ceo. Ullman has been giving Questrom a cool reception.
Questrom reportedly also has met with Laurence Tisch, an influential board member, who is said to favor Federated's management over Macy's.
Ironically, July 1 is the day Roger N. Farah is scheduled to start his new job as Macy's president and chief operating officer, overseeing the company's merchandising efforts. Farah was chairman and ceo of Federated Merchandising.
As reported, Federated claimed that a "non-compete" clause in Farah's contract barred him from joining Macy's for two years after his contract expires on June 30. However, in an out-of-court settlement, Macy's retained the right to bring Farah on board next month.Federated has been pursuing a merger with Macy's since January and Macy's has consistently rebuffed Federated. Two weeks ago, however, the companies started holding official talks, but no agreement has been signed.
Sources said those attending the meetings so far include Ronald Tysoe, Federated's vice chairman and chief financial officer, Ullman and two other Macy executives: Thomas Shull, executive vice president, and James Kenney, group vice president for corporate planning.
In another development, attorneys for Cyrus R. Vance, the court-appointed mediator in the Macy Chapter 11 case, are expected to go to court this week to extend Vance's term.
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