Investor group ups buyout bid for Macy’s by nearly $1 billion
The investor group hoping to buy Macy’s and take it private has sweetened its offer after the department store retailer rebuffed its initital bid as too low.
In a statement on Sunday, the group — Arkhouse Management Co. and Brigade Capital Management—said it was increasing its all-cash proposal to acquire Macy’s to $24 a share, or about $6.6 billion, up from its initial bid in December of $21 a share, or about $5.8 billion. The Macy’s board rejected the offer in January, citing “lack of compelling value” in the proposal.
Arkhouse and Brigade said their new offer represents a 51.3% premium to Macy’s share price as of Nov. 30, 2023, the day before they submitted their original proposal. It also represents a 33% premium to Macy’s stock price as of Friday, when it closed at $18.01 a share.
“We remain frustrated by the delay tactics adopted by Macy’s Board of Directors and its continued refusal to engage with our credible buyer group,” Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell said in the statement. “Nonetheless, we are steadfast in our commitment to execute this transaction.”
In a short statement, Macy’s confirmed it had received the revised offer and would “carefully review and evaluate the latest proposal consistent with the board’s fiduciary duties and in consultation with its financial and legal advisors.”
The new offer from Arkhouse and Brigade come days after Macy’s unveiled a new strategy under new CEO Tony Spring that includes closing 150 nameplate stores as its focuses on expanding its off-mall smaller-store format. It also plans to open about 15 Bloomingdale’s stores and at least 30 Bluemercury stores during the next three years. The retailer also reported fourth-quarter earnings that were better than expected.
“While the restructuring plan Macy’s unveiled last week failed to inspire investors, the fourth-quarter earnings and year-end results have given us further confidence in the long-term prospects of the company if redirected as a private company,” Kahane and Blackwell said in their statement on Sunday.
In its Sunday statement, Arkhouse and Brigade also disclosed additional information about their financing, including identifying Fortress Investment Group LLC and One Investment Management US as equity capital partners for the proposed transaction. In rejecting the bid in January, Macy’s had raised questions over its financing.
“The notion that the plan we are proposing is not actionable is simply not true,” Kahane and Blackwell said. “We have tried repeatedly to address the concerns raised by the company. With the help of our advisors, we have identified large global institutional financing sources for each debt component of the transaction with strong interest in finalizing commitments during a customary diligence process.”