NEW YORK — If size really does matter, then Federated will have to make an acquisition in order to maintain its position relative to a now Marshall Field’s-enhanced May Co.

All eyes are fixed on Dillard’s as the prime target, since the nation’s third-largest department store company would expand Federated into the coveted Midwest, where it has little or no presence. Dillard’s is also attractive, in part, because its dismal operating performance during the last five years means it could probably be had for well below its $7.86 billion in annual sales. Calculating the midpoint between Dillard’s value as a revenue generator and as a real estate play, A.G. Edwards & Sons analyst Robert Buchanan estimated a price tag of $5.35 billion for the company.

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