NEW YORK — While reports swirled Tuesday that Federated Department Stores Inc. and R.H. Macy & Co. are close to a merger deal, Macy’s and a key creditor group remained publicly committed to a stand-alone plan.
Macy’s board, as reported, heard its first detailed report from Federated’s chairman, Allen I. Questrom, last Friday, and is expected to meet again July 8 to further discuss the proposal. Federated officials are expected to attend and will address concerns raised at last week’s meeting.
One source indicated that while Macy’s is officially pursuing a stand-alone plan, the door is open to Federated, should concerns about job loss, antitrust objections and buying functions be resolved. Federated is expected to eliminate some jobs through consolidations, and the Justice Department and the New York State Attorney General are conducting independent anti-trust probes into the prospective merger. As for the buying concern, Macy’s buyers work at the store level, while Federated uses corporate buying teams.
Macy’s said it would continue to prepare its plan and will not approve a Federated merger unless its concerns are satisfied and Federated’s proposal wins a consensus from creditors.
According to sources close to the negotiations, however, Macy’s executives and many on its board are far more receptive to a merger with Federated than they were prior to last week’s meeting.
A Macy’s spokeswoman denied these reports.
Should they merge, many question what role Myron E. Ullman, Macy’s chairman and ceo, would have under Federated.
“Questrom has the highest regard for Ullman and believes there is an important role for him to play in the combined company,” said Gilbert Harrison, chairman of Financo Inc., which is advising Federated on some aspects of the merger.
The bondholders’ committee, meanwhile, remains firmly behind Macy’s own proposal.
“Six weeks ago the bondholders’ committee said it favored the Macy’s proposal because it offered bondholders more,” a source close to the bondholders’ committee said Tuesday. “Nothing has changed in the meantime to change that stance,”
The bondholders’ committee, with a $1.3 billion claim, is the lone committee backing Macy’s. It valued Macy’s proposal as high as $550 million — compared with Federated’s $400 million offer — and said it would remain solidly behind Macy’s unless Federated sweetened its offer.
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The source at the bondholders’ committee said it has not met with Federated for a week but has had at least one phone call from a Federated representative and would not rule out a meeting with Federated this week.
Several persons close to the case said Robert Miller, counsel to the bondholders’ committee, by sticking with Macy’s was attempting to win a higher offer from Federated.