Shares of Federated Department Stores, the owner of Macy's and Bloomingdale's, had their biggest gain in more than two and a half years...

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Shares of Federated Department Stores, the owner of Macy’s and Bloomingdale’s, had their biggest gain in more than two and a half years yesterday after analysts said the company will add to profit with its purchase of May Department Stores.

Shares of Federated, which yesterday agreed to buy May for $11 billion, climbed $4.53, or 8 percent, to $60.98 yesterday. May, based in St. Louis, climbed $1.64, or 4.8 percent, to $36.15.

Federated would become the second-biggest U.S. department-store company with the acquisition and said it stands to save $450 million by 2007 by lowering administrative expenses.

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“We believe the combined company represents promising operating potential and a significant increase in shareholder value,” Deutsche Bank analyst Bill Dreher wrote in a report. He raised his rating on Federated stock to “buy” from “hold” and his price target to $68 after the agreement.

Before yesterday, Federated shares had gained 5.5 percent in the past 12 months. May shares, which rose 1.1 percent last year, had gained 17 percent this year, spurred by reports of Federated’s interest in buying the company.

Through 2004, May had four straight annual-sales declines at stores open at least a year. Federated Chief Executive Terry Lundgren will have to improve sales at May to meet his goal of gains of about 2.5 percent to 3 percent by 2007.

“There is the opportunity for the sales of the merged company to outpace each company individually [if sales of both were combined] through the rollout of merchandising, sharing of best practices and in-store initiatives,” Smith Barney analyst Deborah Weinswig, who rates Federated a “buy,” wrote in a report.

The combination could add $1 a share or more to earnings in 2007, Merrill Lynch analyst Stacy Turnof wrote in a report. She has a “neutral” rating on the stock.