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Federated Decision on May Could Come Soon

Federated Department Stores Inc., with its board of directors scheduled to meet Friday, could make a crucial decision regarding its merger with May Department Stores at that time.

NEW YORK — Federated Department Stores Inc., with its board of directors scheduled to meet Friday, could make a crucial decision regarding its merger with May Department Stores at that time.

However, it is believed to be one of Federated’s regularly scheduled meetings, and not one called especially to consider the merger topic, which will nevertheless receive attention.

If the board decides to proceed with the merger, it would need to hash out an announcement disclosing the agreement of terms with May, so a public disclosure might not be immediate. The May Co. board is reportedly anxious to strike a deal with Federated, considering its stocked has perked up on the merger speculation, the company is operating without a chief executive since the departure of Gene Kahn last month and the retailer’s performance has been steadily slipping for years, making a turnaround very challenging. A merger, retail specialists have said in the past few weeks, would be a much simpler resolution for the May board.

It’s also likely that Federated will discuss possible sell-offs of May operations, including retail divisions and the credit operation, to help fund the merger, and avoid government antitrust concerns and store overlaps. J.C. Penney, Nordstrom and Saks Inc. are believed to be interested in certain May locations, while Federated is most interested in May’s Marshall Field’s chain in the Midwest and Foley’s in Texas.

Meanwhile, shares of both Federated Department Stores Inc. and May Department Stores Co. changed hands at a brisk pace on Wednesday in New York Stock Exchange trading. Investors have been fairly active while awaiting news about the outcome of merger talks between the retailers.

Shares of Federated were particularly active, with 3.1 million traded, compared with an average volume of 1.7 million. The stock closed at $56.84, up $1.55, in Big Board trading. The intraday high was $57.21, while the low was $55.53.

May’s stock also traded briskly, with 4.4 million shares traded versus an average volume of 3.6 million. Shares of May have been fairly active since merger rumblings surfaced last month. The stock closed Wednesday at $34, up 38 cents. The intraday high was $34.08 while the low was $33.79.

Several Wall Street analysts have written in research notes that the takeover price might be around $36 to $43. An agreement at the midpoint range of $39.50 would represent a premium of 16.1 percent above Wednesday’s closing price of  shares of May.

A hedge fund manager said Wednesday that the expectation on the Street is that a merger will take place, involving a 50 percent cash, 50 percent stock transaction.

Meanwhile as negotiators focused on purchase price, it was business as usual for Federated’s well known, national nameplate. Macy’s on Wednesday launched THISIT.com, a new Web site targeting “fashion-savvy juniors.” The retailer said that the dot-com was developed to “complement the lifestyles of young women from their teens to their early 20s.” The site was designed and built by Macys.com.