NEW YORK — Federated Department Stores is to announce its fourth-quarter earnings results today, but the real question for Wall Street is the status of its merger talks with May Department Stores Co.

The two retailers negotiated last week, and there was speculation that they were reasonably close on a price, said several bankers, who asked not to be identified. In that scenario, the financial experts said talks might have continued through the holiday weekend, and a variety of issues could be resolved quickly. The structure of any deal would likely entail an offer of 50 percent in cash and 50 percent in Federated stock.

“A merger is the only way out for May,’’ said retail consultant Kurt Barnard. “This is a deal that benefits both companies. There is no guarantee that May will find the right chief executive officer’’ to replace the ousted Gene Kahn “to turn around the company, and Federated will get May stores in the low end of the market place that competes with discounters as well as locations in the high end of the market.”

Many vendors and the consultants who work with them last week said they were resigned to the possibility of a merger that would create a department store giant. Federated is the parent company of Macy’s and Bloomingdale’s, and May counts Marshall Field’s, Lord & Taylor and Strawbridge’s among its nameplates. One consultant said that many of his clients now “face an uncertain future because a merger would mean fewer accounts.”

An investment banker said, “This is sending shivers up the spines of many vendors, who now will be selling to one giant and losing whatever leverage they had when they had more options.”

Christine Augustine, retail analyst at Bear, Stearns & Co., forecasts that Federated will report fourth-quarter earnings per share of $2.55, versus $2.29 a year ago. Total company sales are anticipated to rise 0.4 percent to $5.07 billion compared with $5.05 billion last year, with a same-store sales gain of 0.8 percent against an increase of 1.4 percent last year.

Wall Street is also anticipating it will hear about Federated’s plans for its credit card business. The retailer has already said it was exploring its options in this area. With a May merger possible, any deal would likely also involve the sale of both credit card portfolios, experts said.

This story first appeared in the February 22, 2005 issue of WWD. Subscribe Today.

The sticking point since merger talks heated up last month has been what constitutes a fair price for Federated to pay for May. The buzz in financial circles was that an agreement could materialize at around $40 a share. Shares of May closed on Friday at $33.45 in New York Stock Exchange trading.

Wall Street analysts last week pegged May with an acquisition value of $36 to $40 a share. The merger talks have been going on for several weeks with temporary breaks.

A person familiar with both Federated and May said that May was seeking a premium, hoping for north of $45 a share, as  it now owns the upscale Marshall Field’s, which Federated chose to walk away from last year because the price was too high. May bought the business — 62 Marshall Field’s stores and 9 Mervyn’s sites — from Target in June 2003 for $3.24 billion. Many bankers and retail consultants at the time said that May overpaid.

One Wall Street banker said that Federated’s board wanted Terry Lundgren, the company’s chairman and ceo, to strike a more favorable deal. The rationale was that Federated shouldn’t have to pay for May’s decision to overpay for Marshall Field’s. Another Wall Street source said that Federated would prefer to pay in the $36-a-share range.