FEDERATED SEEKING BUYER FOR SOUTHEAST MACY UNITSByline: Sidney RutbergNEW YORK--Federated Department Stores Inc. is reportedly trying to dispose of a block of R.H. Macy & Co. stores in the Southeast, according to a research report by Prudential Securities."We believe Federated is showing 24 of its Macy's stores in the Southeast to potential buyers," and preliminary discussions have started, the report said.Federated, which has agreed to merge with Macy's, had no comment Wednesday on the Prudential report.According to Prudential, Federated appears to be interested in a combination of cash and store swaps, with Dillard Department Stores and May Department Stores as the most likely participants. Two possible scenarios, Prudential speculated, would be a trade with Dillard for its Cleveland division or one with May Co. for Meier & Frank.The Macy stores that Prudential said are probably on Federated's hit list have total sales estimated at $1.3 billion.They comprise 12 stores in Georgia, with sales totaling $681 million; five in Texas with sales of $230 million; four in Florida, $227 million; two in Louisiana, $113 million, and one in Alabama, $56 million.The 14-unit, $340 million Cleveland division of Dillard's would be a good fit for Federated's Lazarus division. The addition of the Dillard's units would create a $1.5 billion, 64-unit division.May's Meier & Frank division, with sales of about $325 million, would strengthen Federated in the Pacific Northwest, where it is currently operating 39 Bon Marche units with sales exceeding $830 million.In either case, Prudential said, Federated would get some cash on top of the asset swap. The Meier & Frank swap could also require some cash, the report noted. Dated Aug. 22, the report was written by analysts Wayne Hood and Dina Pilotis.Noting that Dillard's is usually a low bidder, the report said, "We don't think Dillard could or should take the low road in this transaction. It could have more strategic implications for Dillard's future growth and ability to protect its market share than any other Dillard transactions we remember. We might rethink our buy rating on Dillard if they lose this one." --Fairchild News Service

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