Arkhouse Management and Brigade Capital are increasing their bid to acquire Macy's by nearly one billion dollars, aiming to privatize the department store chain.
Investors Increasing Takeover Bid
The investor's group revealed in an announcement made on Sunday that it is elevating its Macy's takeover bid to $24 per share, amounting to approximately six billion six hundred million dollars, an increase from their previous bid of $21 per share, or roughly five billion eight hundred million dollars, which Macy's board had turned down in January, citing a lack of "compelling value" at the time.
Arkhouse and Brigade stated that the revised offer represents a 51.3% premium over Macy's share price as of November 30, 2023, when they initially submitted the proposal, highlighting a 33% premium over Macy's stock price as of Friday's closing, which stood at $18.01 per share.
Arkhouse reiterated its proposal for Macy's, suggesting a sale at a premium to benefit stockholders with value and liquidity.
Macy's Retail Challenges Prompting Investors on Its Sale
Along with other traditional department stores, Macy's faces challenges from online rivals and smaller brick-and-mortar peers, which has allowed Arkhouse and Brigade to urge Macy's to consider a sale.
Macy's Board Opposition
Macy's encounters board opposition from Arkhouse Management, which has nominated nine director candidates, including individuals with expertise in retail, real estate, and capital markets, for the department store's 14-member board.
Macy's confirmed receipt of the nominations from Arkhouse, which had previously submitted an unsolicited bid of $21 per share for the company in December. Macy's board turned down the five billion eight hundred million dollars offer and raised concerns regarding the financing status of Arkhouse.
Arkhouse's Frustration on Boards' Delaying Tactics
Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell expressed frustration with Macy's Board of Directors' delay tactics and reluctance to engage with their credible buyer group. They affirmed their unwavering dedication to proceed with the transaction.
Macy's Statement on Meticulously Reviewing the Proposal
Macy's acknowledged the offer, which it affirmed to meticulously review and assess, with inputs from its financial and legal advisors, which a spokesperson for Macy's declined to provide further commentary.
Macy's unveiled a restructuring strategy last week, entailing the closure of 150 stores, including its renowned flagship store in downtown San Francisco. Separately, the company reported fourth-quarter earnings that surpassed projections.
READ ALSO : Macy's Grapples with Declining Sales, Shutting 150 Underperforming Stores to Step Up Its Luxury Brand
Investors' Confidence in Macy's Long-Term Potential as A Privatized Company
In a press release, Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell expressed increased confidence in Macy's potential, citing that "the fourth-quarter earnings and year-end results have given them "confidence in the long-term prospects of the company if redirected as a private company," despite investors' lukewarm response to the recent restructuring plan.
Macy's stock has dropped 10% this year and 21% over the past year, while the S&P 500 has gained 8% this year and 27% over the past year.
