KKR eyes Macy’s(2)

As Macy’s deals with sluggish sales, Kohlberg Kravis Roberts is reportedly looking to take the US department store retailer private in a $24bn deal.

Private equity firm Kohlberg Kravis Roberts is looking to acquire Cincinnati-based retailer Macy’s for $24 billion (€17 billion), according to a report by Women’s Wear Daily. The transaction would offer stockholders $52 per share, according to the trade journal.

Macy’s reportedly owns 54 percent of its real estate, which could make it an attractive target for a leveraged buyout.

KKR, which filed to go public earlier this month, has also been busy in the retail space. The firm recently completed the $7.3-billion acquisition of Dollar General, a discount retail chain with 8,205 stores in 35 states. The firm also closed a $7.1-billion deal this month with Clayton, Dublier & Rice to acquire US Foodservice from global food retailer Royal Ahold.

Last September, Macy’s rebranded as Macy’s the 400 stores it acquired when it purchased the May Department Store Company in 2005. It now operates around 850 stores under the Macy’s banner. 

In a press release issued last week, Macy’s revealed that its same-store sales were down 2.7 percent in June and it expects same-store sales for July to be flat—or even drop 3 percent. Based on the lower-than-expected sales, the company revised its expectations for second quarter earnings downward from 35 to 45 cents to 20 to 30 cents.

Following the acquisition, KKR will likely keep Macy’s current management in place, including its chairman and chief executive officer Terry Lundgren, according to the article.

KKR declined to comment. 

Rumors of a leveraged buyout pushed up Macy’s share price. The company’s stock closed at $43.09 Wednesday, up 7.6 percent over the previous close for a two-month high. Midday Thursday shares were down slightly, trading at $42.43.