NEW YORK, United States — When reports of a takeover between Hudson's Bay Company (HBC) and Macy's surfaced last week, shares in the department store chain leapt by 12 percent, reflecting investors' hopes that its troubles might soon be at an end.

But in a note published by financial services firm Cowen & Company, analyst Oliver Chen laid out the reasons why he thought the best buyer for Macy’s would be Amazon, calling the combination “revolutionary” as it would fulfil the needs of both companies.

A takeover by either HBC or Amazon would represent an opportunity for Macy's to transform its troubled business, particularly in an environment where the rise of e-commerce has erased the raison d'être for department stores, where a wide range of products can be found under one roof.

In turn, Macy’s, as America’s biggest department store chain, would be a trophy acquisition for either company. But which of the two would make more sense?

Talks between Macy’s and HBC, the Canadian owner of Saks Fifth Avenue, are reported to be at an early stage, with the company closely eyeing Macy's’ covetable $18 billion real estate portfolio. When Hudson’s Bay bought Saks for $2.4 billion in 2013, it quickly leveraged the value of Saks’ real estate to pay down the debt it took on to acquire the chain. As a result, Hudson’s Bay paid less for the whole company than it would have paid to buy the building that houses Saks’ Fifth Avenue New York City flagship store outright.

If Amazon were to buy Macy's, they would end up with a ton of real estate on their books. Is that really advancing the ball?

If the deal between HBC and Macy’s does indeed go through, “We would have a very or relatively rapid closure of excess space,” says Neil Saunders, managing director of research firm GlobalData Retail. “We could have a lot of consolidation exercises in terms of the different brands and [Macy’s] disappearing from certain malls.”

“I personally think it’s not a very sensible deal. Despite the property assets, Hudson’s Bay is biting off far more than it can chew,” Saunders adds. “Macy’s is a business that has a lot of structural issues. There are a lot of problems within the business and I think integrating it would be a massive distraction for Hudson’s Bay… in terms of time, management, attention and structure, it could end up being a real drain on the business.”

In contrast, Amazon could benefit greatly from a Macy’s takeover, argues Chen, providing Amazon with access to suppliers and relationships with apparel brands.

"We believe this deal could address some of [Amazon’s] major consumer pain points,” wrote Chen. “Amazon needs better brands, a more curated assortment, a physical place to return items, and customers could use help with ensuring fit — Macy’s would also give Amazon greater credibility in curation and fashion authority.”

Whether or not Amazon actually needs Macy’s for fashion-brand connections is arguable, however. Part of the department store’s woes stem from lack of differentiating product. But as consumer demand for click-and-collect and same day delivery accelerates, Amazon does need real estate to localise stock. Macy’s, in turn, would benefit from the technology used by Amazon to help it make better decisions across inventory and pricing, which Chen said could positively impact sales. He added that Amazon’s online traffic, younger customer base and mobile technology could also help save Macy’s.

But others in the investment community are not convinced that an Amazon-Macy’s merger makes sense.

"Amazon's market capital is bigger than Macy's and Hudson's Bay put together. But for them to buy Macy's, they are going to end up with a ton of real estate on their books. Is that really advancing the ball?" says Craig Johnson, president of retail consultancy firm Customer Growth Partners."Fighting yesterday's war to get into the retail real estate business. I'm not convinced that they would want to do that." HBC, on the other hand, is led by executive chairman Richard Baker, whose lifelong business has been real estate development.

Whatever the case, Macy’s as it currently stands faces a Herculean task in turning around its business.

Macy’s revealed restructuring plans in January that include the closure of 68 of its 730 stores, cutting more than 10,000 jobs, many of them management positions. At the same time, comparable store sales fell 2.1 percent during November and December last year, after seven straight quarters of decline.

Macy’s says the restructuring will allow it to focus on areas of growth, including its off-price concept Macy’s Backstage, beauty specialty retail chain Bluemercury — which the company acquired in 2015 for $210 million — and China, where it plans to launch e-commerce in 2017.

Some in the industry like Steven Dennis, a retail consultant and former Neiman Marcus executive, believe Macy’s is still a powerful brand worth saving in the long-term.

“If Amazon were to buy Macy’s, I certainly don’t think it’s a crazy idea but there are some complications… I would be sceptical that they would continue to operate them as Macy’s over time,” he said. “I would assume that if HBC were to buy Macy’s, they would be interested in preserving the brand, it’s still a very powerful brand but it’s just hit some hard times. So if your goal were to have Macy’s stay around, I would think that HBC would be the more likely player.”

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