MACY’S HAS A $24 BILLION SUITOR

Private equity firm Kohlberg Kravis & Roberts and Goldman Sachs are about to make an offer for the crown jewel of department stores, Macy’s. KKR is launching its initial public offering and wants to acquire the retailer as its first big catch. According to reports, KKR wants to do this deal as a way to help sell shares of its planned IPO later this year.

It is rumored that KKR would keep current Macy's management, including chairman and CEO Terry Lundgren.

From an investor's standpoint, Macy's is attractive because it generates cash, owns 54 percent of its real estate, and is one of the most famous retail brands in the world with a rich heritage.

There's still some doubt in the industry and among those on Wall Street regarding whether the management of Macy's, formerly Federated Department Stores Inc., would willingly venture into a leveraged buyout situation.

Over 95 percent of the company is held by institutional investors such as AXA and FMR Corp., an LBO could be welcomed - if the price is right. Some feel a buyout might be tempting because the turnaround at former May stores has taken longer than expected and that an LBO would allow the company to "execute the turnaround out of the public eye."

Citigroup analyst Deborah Weinswig said an LBO of Macy's makes sense due to the retailer's strong cash flow and real estate portfolio. Macy's fully owns 54 percent of its real estate for both land and buildings, while another 14 percent are owned buildings on leased property.

Macy’s keeps changing names and faces. One thing we can count on in life is change – that’s about it folks.