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May CEO departure spurs speculation of a buyout

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AUSTIN, Texas (Dow Jones/AP) — May Department Stores Co. stock surged Tuesday amid renewed optimism for the company in the wake of chief executive Gene S. Kahn's abrupt resignation Friday.

The shares rose $4.37, or 16 percent, to close at $32.21 on the New York Stock Exchange.

Kahn's move sparked immediate speculation that May could be a buyout candidate. In addition, investors and analysts appeared equally cheered by the prospect that a strong new CEO could be hired to right the company's flagging fortunes.

"The announcement appears likely to halt the downdrift in May shares, while creating a basis for speculation about possible positive developments," Oppenheimer analyst Bernard Sosnick said in a research note Tuesday.

Late Friday, St. Louis-based May announced that Kahn had retired. President John L. Dunham will act as chairman and chief executive while the company looks for a successor.

May operates more than 500 department stores, including Lord & Taylor, Foley's, Filene's and Hecht's.

Speculation about a possible buyout of the company focused on its chief rival, Federated Department Stores Inc.