Merger talks between May Department Stores Co. and rival Federated Department Stores Inc. reportedly have ended after the two retailers could not agree on how much Federated would pay for May.
Negotiations broke down last week between Cincinnati-based Federated — owner of Macy’s and Bloomingdale’s chains — and St. Louis-based May, operator of Lord & Taylor, Famous-Barr, The Jones Store, Filene’s and other regional department stores, The Wall Street Journal reported Tuesday, citing unidentified people familiar with the matter.
The May board was prepared to negotiate a deal, with May’s interim chief executive John Dunham talking by telephone with Federated CEO Terry Lundgren, but the two were unable to agree on a price, ending current negotiations, the Journal said.
May and Federated declined to comment Tuesday.
Speculation about a Federated-May hookup has simmered for weeks, and the breakdown in talks comes on the heels of May’s announcement last week that its fourth-quarter earnings had slid on weaker sales at stores open at least a year and fell short of Wall Street’s expectations.
That earnings release was the first since last month’s abrupt departure of chairman and CEO Gene Kahn, who resigned just seven months after helping May acquire Target Corp.’s Marshall Field’s department stores and nine Mervyn sites for $3.24 billion — a price many analysts called too steep by several hundreds of millions of dollars.
In last week’s conference call with analysts, May executives offered no detailed update on the search for a successor to Kahn, who analysts said had been criticized by people within the company for micromanaging the business and not developing a clear vision for the company.
Dunham said only that an announcement on Kahn’s replacement would be made when the board makes its decision. He gave no time frame.
Executives also sidestepped questions about talks with Federated.
May’s performance has lagged behind competitors like Federated and J.C. Penney Co. as it has failed to come up with a compelling merchandising vision under Kahn and consequently has resorted to aggressive price cutting to bring customers into the stores.
In the meantime, May said it has closed 25 of 32 underperforming Lord & Taylor stores it said it was jettisoning in 2003.