By David Benoit
Starboard Value LP has made a new investment in retail giant
Macy's Inc., and is suggesting the company spin off its real estate
into a separate company.
Starboard founder and Chief Executive Jeff Smith said Wednesday
that the real estate is worth about $21 billion, and that
essentially the value of the Macy's operating business isn't being
recognized by the stock market. He was speaking at CNBC's
Delivering Alpha conference in New York
Macy's shares rose 4.6% to $69.80 on the news, giving it a
market value of more than $23 billion.
The activist investor has recently succeeded in pushing a
similar move at restaurant operator Darden Restaurants Inc., a plan
put in motion after Starboard threw out the entire board of Darden
in a shareholder vote last year.
Macy's has already been under pressure from other investors who
want it to follow the path set by Saks owner Hudson's Bay Co.,
which has sold some of its property in sale-leaseback transactions.
Macy's has said it would explore options, but people familiar with
the matter have said it is wary of long-term leases.
Starboard believes the company could separate its real estate in
strong-performing malls and enter into lucrative sale-leaseback
transactions with its trophy properties such as the Herald Square
in New York. The sale-leaseback transaction could allow Macy's to
continue controlling the stores.
"In our conversations with them, we think they are receptive to
looking into it," Mr. Smith said of his ideas for Macy's.
Write to David Benoit at david.benoit@wsj.com
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