Hudson's Bay is the owner of Saks Fifth Avenue and Lord & Taylor.
Shares of Macy's Inc. leapt more than 8 per cent Friday morning after a report said Hudson's Bay Co. had approached the largest department store in the USA about a takeover.
The Wall Street Journal report said, "Other details of the talks are unclear and it's far from guaranteed there will be any deal".
The company, which recently closed 68 stores, has a wealth of land and ground leases that it has pondered selling. On Friday, reports suggested that it was shopping for one more brand: Macy's Inc.
Reuters reports that Macy's investors have pushed the company to sell its real estate, or at the very least, separate its retail business from its real estate.
But complicating a takeover, Macy's is saddled with about $7.5 billion in debt.
Spokespersons from Macy's (M) and Hudson's Bay said they do not comment on rumors and speculation.
Macy's, the host of New York's annual Thanksgiving Day parade, is in the midst of an overhaul engineered by Chairman and Chief Executive Officer Terry Lundgren, who assumed leadership of the company in 2004. He was instrumental in Federated Department Store's $11 billion acquisition of the May Co.in 2005, which combined the two largest department store chains. In addition to its flagship Macy's stores, the Cincinnati company owns upscale department-store chain Bloomingdale's.
"Greenwich is one of our most productive stores on a sales-per-square-foot basis", he said. Like other brick-and-mortar retailers, the company has struggled in recent years as consumers shifted their spending from physical stores to online merchants like Amazon (AMZN).
Hudson's Bay is well known for making money off its real estate assets.
Hudson's Bay would face some challenges in absorbing Macy's. That may mean that Hudson's Bay will have to bring in a partner or borrow against more of its real estate holdings.