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Macy’s, the US department-store chain, has received a takeover approach from Hudson’s Bay, as the Canadian retailer seeks to further expand it collection of American-based fashion shops.

People who have been working closely with both companies said the two were in preliminary deal talks and it was too early to determine whether a final agreement would be reached.

For Hudson’s Bay, which has been aggressively expanding its footprint in the US, including the 2013 takeover of high-end chain Saks Fifth Avenue, the acquisition of Macy’s would transform it from a niche upmarket player to a giant retailer.

The Canadian group, which also owns Lord & Taylor, is significantly smaller than the Ohio-based retailer in market value terms, and will be forced to taken on a very large debt pile to finance the transaction. Hudson’s Bay has a market capitalization of less than $2bn, while Macy’s public value it about $10bn.

Macy’s has been under significant pressure in recent years as changing shopping habits and the rise of online retailers has negatively impacted sales at traditional brick-and-mortar department stores.

Macy’s shares jumped about 10 per cent after the Wall Street Journal first reported about the talks. Hudson’s Bay, which is Toronto-listed, saw its stock rise 3 per cent.

Both companies declined to comment on the talks.

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