Macy’s ends buyout talks with investor group, shares slump

Macy’s scrapped talks with an investor group comprising Arkhouse Management and Brigade Capital that had offered to acquire the department store chain for $6.9 billion, sending its shares down 15% on Monday.

In a statement, Macy’s said it terminated the discussions with the two investors because their buyout proposal “fails to provide compelling value” and it was uncertain how it would be financed.

The latest development ends a monthslong effort to take Macy’s private and comes weeks after the company disclosed that the investor group had revised its offer for a second time to acquire the rest of the department store chain that it did not already own for $24.80 apiece, up from an earlier $24-per-share offer.

The revised bid valued Macy’s at $6.86 billion and offered a nearly 43% premium to the stock’s close on Dec. 8, when news of the bid emerged.

Arkhouse, which has a 4.4% stake in Macy’s, and Brigade Capital Management did not immediately respond to a Reuters request for comment.

Macy’s opened its books to the investor group in March and allowed two of Arkhouse’s nominees to join its board’s finance committee, which was responsible for overseeing the evaluation of the buyout proposal.

Macy’s said it provided the investor group with more information, documents and time than is typically required to obtain financing for a public company acquisition. A person familiar with the matter said there was “no actionable proposal” from the investor group after four months of due diligence.

Macy’s said it is now planning to focus on its turnaround plan spearheaded by new CEO Tony Spring ahead of the crucial holiday shopping season. Earlier this year, the department store operator announced job cuts and 150 store closures through 2026 as part of the turnaround plan.

“It seems like … it didn’t work out to Macy’s satisfaction. I think Macy’s was probably anticipating that it would be raised by a few dollars, not 80 cents,” Morningstar analyst David Swartz said.

A hostile acquisition by the investor group would be extremely expensive and there is no guarantee it would work even if the offer is raised again, since Macy’s is looking to focus on its new strategy, Swartz said.
Macy’s raised its annual profit forecast in May betting on Spring’s strategy, though sluggish demand pressured sales. Macy’s net sales of $23.1 billion in 2023 was it lowest in nearly two decades, excluding 2020. Net sales peaked at $28.11 billion in fiscal 2014.

As part of its new strategy, Macy’s has said it plans to open 15 new Bloomingdale’s stores and at least 30 new Bluemercury stores over the next three years to boost growth of its better-performing luxury brands.
Peer Nordstrom, opens new tab has also become a takeover target recently.