• Women's Wear Daily, Thursday, July 19, 2007 10:31 AM

Turmoil in debt financing is hampering Kohlberg Kravis & Roberts' efforts to buy Macy's, whose real-estate assets would be disposed of through the investment firm's private-equity unit, according to sources.

KKR wants to buy the department store chain for $24 billion or $52 a share, but Macy's stock price rose 7.6% Wednesday on news of the offer. Lingering effects of the subprime mortgage debacle are affecting the deal. "This couldn't be a worse time to try to get a deal done," says one source.

One Wall Street analyst thinks there will be a deal. "Macy's has a lot of things private-equity looks for -- established cash flow and substantial ownership of real estate," says A.G. Edwards analyst Robert Buchanan.

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