Federated Department Stores' possible $10 billion buyout of rival May Department Stores has reached a critical point.

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ST. LOUIS — Federated Department Stores’ possible $10 billion buyout of rival May Department Stores has reached a critical point, with boards of both retailers to meet separately into the weekend to perhaps finalize the deal, The Wall Street Journal reported in yesterday’s editions.

Citing unidentified sources, the Journal reported that Cincinnati-based Federated — owner of Macy’s and Bloomingdale’s chains — had a regularly scheduled board meeting yesterday at which directors likely discussed a formal proposal.

The board of May — operator of Lord & Taylor, Famous-Barr, The Jones Store, Filene’s and other regional department stores — then would review the offer over this weekend, the Journal reported.

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The newspaper said the two sides have been split on financial terms of the deal. Three sources cited in the report pegged the potential offer by Federated to likely be “somewhat below $40 per share,” with May also negotiating over its presence in St. Louis, its headquarters since 1905.

May spokeswoman Sharon Bateman declined to comment yesterday.

Messages left with Federated were not returned. A message also was left with the New York office of Terry Lundgren, Federated’s chairman, president and chief executive.

Meyer Feldberg, a member of Federated’s board, was attending the directors’ meeting yesterday in New York, said an aide in his office. It was not known how long the board’s meeting would last.

The Journal said that though price has been a sticking point in the talks, with May wanting more than Federated was willing to pay, few other problems were said to be apparent between two retailers with little geographical overlap. Brokerage firm Smith Barney estimates that just 94 malls have both Federated and May stores.

May reportedly has suspended its search for a new chief executive as it continued merger talks with Federated.

May’s shares rose $1.50 to $35.35 yesterday, having ranged from $23.04 to $36.48 over the past year. Federated shares fell 22 cents to $56.79, near the upper end of its 52-week range of $42.80 to $59.91.

At May, John Dunham has served as interim chief executive since Gene Kahn abruptly stepped down last month as chairman and CEO, just seven months after helping May acquire Target’s Marshall Field’s department stores and nine Mervyn sites for $3.24 billion. Many analysts said the price was too steep by several hundreds of millions of dollars. May beat out Federated in that bidding.

Analysts said Kahn had been criticized by people within May for micromanaging the business and not developing a clear vision for the company.

Some analysts have suggested that uniting two of the nation’s largest department store chains into a behemoth with nearly 1,000 stores would make sense, creating a more efficient operation better equipped to go up against discounters. Together, the companies also could wring savings out of their merged retail systems and buying clout, some analysts suggested.

Others questioned whether the two retailers would be a good fit, citing the belief that Federated may be more upscale and May always margin-oriented while lacking on the merchandising side.

May’s performance has lagged behind competitors like Federated and J.C. Penney as it has failed to come up with a compelling merchandising vision under Kahn and consequently has resorted to aggressive price cutting to bring customers into the stores.