Women’s Wear Daily is reporting this morning that Kohlberg Kravis Roberts and Goldman Sachs Group are preparing a $24 billion bid to buy the Macy’s retail chain.
According to WWD, a bid was expected last weekend, and both parties want to finalize a deal in time for Macy’s investors’ meetings scheduled for July 23:
Should a deal come to fruition, it is believed KKR would keep current Macy’s management in place, including chairman and chief executive officer Terry Lundgren, the architect of the current configuration of the department store giant.
A $24 billion dollar deal would mean $52 a share, a “30 percent premium over the current trading price of the stock.” As The Wall Street Journal‘s Deal Journal points out, the stop-and-go publicity the buyout has been getting has been good for Macy’s shareholders.
Should a deal in fact be in the works, it would be one of the worst-kept M&A secrets in history. As we’ve discussed, Macy’s stock shot up three Fridays in a row earlier this month on hopes of an imminent deal announcement. The stock is up about 15% in the past year. Still, it could be had at a relative bargain. As a multiple of trailing cash flow, Macy’s, formerly known as Federated Department Stores, trades at 7.1 times, compared with an average of 10 times for the department store industry, according to Capital IQ.
KKR is among the leveraged-buyouy firms that seems to be emptying its cash register in advance of an expected public offering of its own later this year. A large, varied and star-studded portfolio certainly won’t hurt them.