KKR shopping at Macy's

According to Woman's Wear Daily, Kohlberg Kravis & Roberts is partnering with Goldman Sachs Group Inc. (NYSE: GS) to make a $24 billion offer for struggling retailer Macy's Inc (NYSE:M). The former Federated Department Stores, which adopted the better-known Macy's brand in 2005, has 825 stores and $27 billion in annual sales.

KKR is said to be offering $52 a share for the stock, which has been creeping up on rumors of such a deal, to its current $43.12. The Wall Street Journal is among those openly speculating that one driving force behind this deal is KKR's plans to offer an IPO later this year. However, such a deal only beautifies their offering if the market buys into the value of Macy's, which has struggled to establish consistent earnings since leaving bankruptcy in 1992.

WWD interviewed market analysts who voiced skepticism that the Macy's current management would welcome this offer. Given current concerns that private equity money could dry up as lenders tighten up in the aftermath of the housing collapse, I suspect Macy's stockholders won't be prone to wait for another suitor.

Is it a good deal for KKR? Given Macy's portfolio of prime real estate and legendary brand, this deal seems like one with very moderate risk and substantial potential reward.