While the transaction could happen because TJX's market capitalization nearly doubles Macy's, it seems unlikely at this point, said Jan Kniffen, founder of J. Rogers Kniffen, which provides investment consulting related to retail. However, any deal highlights the immense value of Macy's real estate relative to its operating business.
"Macy's real estate is worth so much that in theory they can be bought and paid for with their own assets," he said, adding that a TJX acquisition "would be one way to do it."
Kniffen's comments came in response to Starboard LP CEO and CIO Smith's remarks that sent Macy's stock soaring Wednesday. He suggested Macy's could function with its operating business and real estate in two separate companies, contending that the retailer's shares should be worth nearly double their current value.
"We believe there is an opportunity to create two leading companies ... while maintaining the dividend," Smith said during a panel on activists' best ideas at the Delivering Alpha conference presented by CNBC and Institutional Investor.
By Smith's calculations, Macy's real estate makes up about $21 billion of its $29 billion in total enterprise value. Kniffen noted Thursday that "the real estate is worth a lot more relative to the operating company than it's ever been."
"We never got to the point where the two values together were worth doing the deal. Today, they are worth doing the deal," Kniffen sad.
In a statement after Smith's comments Wednesday, a Macy's spokesman said the company evaluates "all our locations and their retail and alternative-use values."