Is Macy's the next private equity play?

There's been some speculation lately that Macy's will be the next retailer to be scooped up by private equity purchasers.

Wall Street sources cited as likely bidders Kohlberg Kravis Roberts, the buyout firm famous for its takeover of RJR Nabisco in the 1980s; and Goldman Sachs Group, Macy's longtime investment banker.

Macy's would be a ripe takeover candidate because its rich cash flows and attractive real estate could be used to pay off debt that leveraged buyouts pile up.

There has even been speculation that Eddie Lampert (of Sears/Kmart fame) might make a play for another big retail name. Although he seems to have his hands full with the continuing bad news from his current possessions.

Some analysts see the whole scenario as unlikely:

"We view a Macy's LBO as possible but not probable," Deborah Weinswig, a New York-based analyst [for Citigroup], wrote in a report Tuesday.

"While there are a few reasons why an LBO might make sense for Macy's, especially given the slow progress of the May turnaround, we believe Macy's past LBO experience makes a transaction unlikely."