Traders indicated last week that private equity shoppers may be combing the aisles of Macy’s Inc. 
    
That speculation sent shares of the department store operator soaring 8 percent on Friday, with a slight pullback on Monday. Buyout firm Kohlberg Kravis Roberts & Co. was mentioned in the trader chatter as a possible buyer (seems feasible), but so was Providence Equity Partners (huh?). Providence invests in tech and media. A spokesman has said the firm is not involved with Macy’s in any way.
    
 
Private equity buyers have certainly shown a strong appetite for retailers, but a Macy’s leveraged buyout could evoke some unhappy memories.
 
In a research report, Bear Stearns notes that many members of current management lived through the company’s LBO in the 1980s and subsequent bankruptcy and might not want to go down that road again.

If a private equity buyer did scoop up the company, it would likely fetch a per-share price in the “low $50s,” Bear Stearns says, or a premium of around 20 percent.  

Bear Stearns also noted that the retailer’s turnaround of the May Department Stores business it acquired has taken longer than expected, so fixing that business without the glare that goes along with being a public company could be tempting. 
 
Federated was acquired in a 1988 leveraged buyout by Canadian real estate developer Robert Campeau. By 1990, Federated, saddled by massive debt from that buyout was in bankruptcy. It emerged as a new public company in 1992 and in 1994 bought Macy’s, which was in bankruptcy following a 1986 leveraged buyout. 
 
 
So if history is any indication, and if the Providence mention proves that the Macy’s chatter is just a rumor, then banking on an LBO seems like a tough bet. But if private equity firms have proven anything in the last year, it’s that few companies are beyond their grasp.
(Additional reporting by Brad Dorfman)