Report: KKR Mulling Macy's

New York, NY, July 18, 2007--Private equity firm Kohlberg Kravis & Roberts Co. is studying a bid to buy Macy's Inc. for about $24 billion, according to an online trade report.

Macy's shares rose over 16% in pre-market trading.

According to WWD, the two parties could agree in principle within a few days. The $52 a share offer may or may not exclude Macy's debt, according to the trade paper, which cited anonymous private equity sources.

WWD also said that it was believed that KKR would keep current Macy's management, including chairman and CEO Terry Lundgren, who orchestrated Federated Department Stores Inc.'s acquisition of May Department Store Co. in 2005. The name was changed to Macy's in June.

WWD also reported that The Principal Investment Area, Goldman Sachs Group Inc.'s private equity arm, and its real estate group are believed to be participating in the negotiations.

Federated officials declined to comment. KKR could not be immediately reached for comment.

Rumors about a possible buyout of Macy's have driven shares up in recent weeks and are occurring as the department store operator struggles to reinvigorate its business. Last September, the company converted most of its former May Co. stores into Macy's, transforming Macy's into a national department store brand. But the turnaround of the former May stores has not been progressing as well as expected.

Macy's reported last week that same-store sales, or sales at stores opened at least a year, fell 2.7 per cent in June. Analysts surveyed by Thomson Financial expected same-store sales to fall just 0.8 per cent.

The company also said earnings for the second quarter would be much lower than the year-ago period. Macy's is expected to report financial results Aug. 6.