Activist Investor Group Raises Bid for Macy’s
The activist investor group seeking to buy Macy’s increased pressure on the department store chain on Sunday, raising its offer and announcing additional details about its financing plans.
This is what Arkhouse Management and Brigade Capital Management say in a press release that they were now offering $24 per share, valuing the retailer at $6.6 billion. The new offer is higher than the $21 per share they last put forward and a 33.3 percent premium to Macy’s closing price of $18.01 on Friday.
Arkhouse and Brigade named additional investors they had brought on as equity partners, Fortress Investment Group and One Investment Management. Arkhouse and Brigade also said, in a pointed response to Macy’s questions about its financing, that they had “identified major global institutional funding sources” that “represent 100 percent of the capital required to purchase the shares of Macy’s that we do not yet possess.”
The retailer has been under pressure from the investor group since December, when the group launched a $5.8 billion bid that would take Macy’s private. Arkhouse said that unless the retailer started sharing non-public information, it could submit its offer to shareholders. The investor has since nominated nine people to Macy’s board.
Macy’s said Sunday it would “carefully review and evaluate” the latest proposal.
“The board of directors of Macy’s Inc. has a proven track record of evaluating a wide range of options to create shareholder value, is open to the best path to achieve this objective and is committed to continuing to take actions it believes are best. interests of the Company and all shareholders of Macy’s Inc.,” the company said in a statement.
The retailer has tried to stay focused on its own turnaround strategy.
Last week, Macy’s announced a strategy that would dramatically change the makeup of the company. It said it would close 150 of its namesake stores over three years, while opening more locations of Bloomingdale’s and Bluemercury, the luxury chains.
“I hope we can close the company before they start these store closures,” Gavriel Kahane, managing partner at Arkhouse, said in an interview.
Matt Perkal, partner and head of special situations at Brigade, said the “proposal provides the best path forward for Macy’s shareholders by allowing them to benefit from the company’s significant unrealized value.”
As a department store, Macy’s is struggling to win over customers who are increasingly shopping in a world of e-commerce as enclosed malls close. Macy’s has recorded declining sales in recent quarters.
New CEO Tony Spring, who spent his four-decade career at Bloomingdale’s, has acknowledged that the shopping experience at Macy’s is not pleasant. Shoppers often encounter cluttered stores with poorly displayed clothing and have difficulty finding staff. The retailer said it planned to have 350 more locations by the end of 2026 and that capital raised from the closures would flow into the remaining stores.
Mr. Kahane said that if the company were acquired, investors would focus on turning around the department store business, a feat he said would be easier if the retailer were privately held. He also pushed back against analysts’ speculation that he only wanted the retailer because of its real estate.
“So we’re clearly here for real estate law,” Mr. Kahane said. “We’re here because we think they have a lot of real estate on the balance sheet, and that real estate is valuable because it has a great tenant in it..”
He downplayed speculation from some retail analysts that investors were simply hoping another buyer would jump in for them.
“I will feel so much worse if someone comes in and hits us,” Mr. Kahane said. “I would also be much more surprised.”