Despite lackluster retail numbers this summer, cash-rich private-equity shops continue to pore over the sector in search of a bargain. Wednesday, shares of Macy's jumped 7.6 percent to $43.09, close to the high end of its 52-week per share range of $33.52 to $46.70, on a Women's Wear Daily report thatshop Kohlberg Kravis & Roberts (KKR) is eyeing the department store giant. But will it actually bite?
While a Macy's LBO is possible, some analysts are saying that it isn't probable. For one thing, history is not on its side. Flash back to 1988 for an episode of leveraged buyouts gone awry. In what would turn out to be the biggest non-oil US merger at the time, Canadian real estate mogul Robert Campeau purchased the retailer, then known as Federated, for $6.6 billion. The April Fool's Day, which Fortune's Carol J. Loomis called "a financial megabomb that was barely built before it was detonated," lead the company into a bankruptcy filing less than two years after the deal closed.
Fortune asks Is private equity still shopping retail?.