Two investment firms, Arkhouse Management and Brigade Capital Management, have submitted an increased buyout offer to Macy’s over the weekend.
The proposal entails an all-cash offer to purchase outstanding Macy’s shares at $24 per share. Macy’s responded on Sunday, stating that its board would carefully assess and evaluate the latest proposal in line with its fiduciary duties, in consultation with its financial and legal advisors. The retailer emphasized its commitment to exploring options to create shareholder value and affirmed its dedication to actions in the best interests of the company and its shareholders.
Macy’s identified Bank of America Securities and Wells Fargo as its financial advisors, with Wachtell, Lipton, Rosen & Katz serving as its legal advisor.
Arkhouse and Brigade Capital highlighted that their $24-per-share price represents a 33.3% premium over Macy’s closing share price on Friday and a 14.3% increase from their previous offer. They expressed confidence in securing financing for the proposed deal from large global institutional sources, with significant interest in finalizing commitments during the customary due diligence process. The firms clarified that half of the equity contribution for their offer would come from Fortress and OneIM.
This new offer follows the rejection of their prior proposal, which offered $21 per share, by Macy’s board over a month ago. Concerns about the financing of the proposal and a perceived lack of compelling value were cited as reasons for the rejection.
Arkhouse and Brigade Capital stated that they decided to raise their offer based on Macy’s fourth-quarter and 2023 results, which have bolstered their confidence in the company’s long-term prospects under private ownership. They also hinted at the possibility of further increasing their offer.
Macy’s recent financial results revealed $23.09 billion in annual net sales and $105 million in annual net income. The retailer announced plans to close 150 underperforming locations by the end of 2026 and emphasized a focus on its Bloomingdale’s and Bluemercury brands. As of February 3, Macy’s operated 718 stores, including approximately 500 Macy’s locations, nearly 60 Bloomingdale’s stores, and nearly 160 Bluemercury stores.
Macy’s CEO Tony Spring noted that the approximately 350 Macy’s stores earmarked for continued operation outperformed non-go-forward locations in comparable sales and four-wall adjusted EBITDA rate during fiscal 2023.
Arkhouse and Brigade Capital argued that Macy’s initiatives under its “bold new chapter” failed to inspire investors and asserted that their latest offer would deliver significant value and immediate liquidity to Macy’s shareholders.
