May Department Stores Company has decided to put off its search for a replacement for chairman and CEO Gene Kahn, who abruptly resigned in January, as its interim CEO John Dunham has continued merger discussion with Federated Department Stores Inc.

Negotiations between St. Louis based May and Cincinnati-based Federated resumed last weekend after a brief pause due to a disagreement over pricing. May has supposedly been aiming for $40 per share, whereas Federated had suggested around $30.

Either or both sides may concede to arrive at a price. May’s (MAY) shares are on the rise, trading at $33.78 on the New York Stock Exchange, with a 52-week high of $36.48 and a low of $23.04.

Federated (FD) shares fell yesterday to $55.25. Its 52-week high is $59.91 and its low is$42.80.

May has had a rough fourth quarter with earnings down 4% from last year, and the loss of several stores, and its CEO. Though May acquired Target Corporation’s Marshall Field’s department stores, and nine Mervyn’s locations for $3.24 billion seven months ago, it has shut down 25 Lord & Taylor stores, and fallen behind its competitors, including Federated Department Stores Inc.

This has been attributed in part to the fact that rather than developing superior marketing strategies and advertising campaigns, May’s Mr. Kahn slashed prices to attract customers, which burdened the company significantly.

Should May and Federated merge, the combination of two of America’s largest department store companies would create a chain with approximately 1,000 locations.

An integrated business structure could better prepare them to go up against discounters, increase savings, and expand their geographic reach. There is no reason that this union should not have a smooth transition.

Both May and Federated declined to comment on their expected merger. However, informed sources who wished to remain anonymous, said the deal was likely to go through once the negotiations accelerated.