An investor group reportedly offered $5.8 billion to buy Macy’s and take the major American department store chain private.
Real-estate focused investing firm Arkhouse and Brigade Capital Management, an asset management company, submitted a proposal to acquire the Macy’s stock they don’t already own on Dec. 1, people familiar with the matter told The Wall Street Journal.
The outstanding shares were priced at $21 a share, per The Journal — a 32.4% premium from Macy’s $15.86 closing price on Nov. 30.
As of early trading hours Monday, the iconic retailer — which operates 500-plus stores across the US under its banner, plus some 85 locations of its higher-end sister store, Bloomingdale’s — was trading at $17.39, marking a staggering 62% increase over the past month.
Despite the rally, the price is a far cry from Macy’s $70-a-share peak in 2015, when the rise of digital retailers took a toll on business.
Arkhouse and Brigade Capital believe that Macy’s is undervalued in public markets.
Despite already offering a premium for the outstanding shares, the investors have indicated that they would be willing to raise their offer based on due diligence, according to The Journal.
The outlet reported that an investment bank has already provided a letter of support for the two firms to raise the necessary financing to bring the deal to the closing table.
Both Arkhouse and Brigade Capital already own a big position in Macy’s through Arkhouse-managed funds, though it wasn’t immediately clear just how many shares the group currently has.
A representative for Arkhouse declined to comment.
The Post has sought comment from Brigade Capital and Macy’s.
Macy’s board of directors has reportedly met to discuss the offer, though it’s unclear what the retailer’s next move will be.
The $5.8 billion deal values the company at more than $1 billion more than its current market cap.
Macy’s has struggled in recent years to keep up with the ever-changing consumer landscape, which has seen shoppers ditching in-store experiences for online marketplaces, where competition is stiffer.
Meanwhile, Macy’s has expanded its portfolio scooping up skin-care chain Bluemercury in 2015 — which now has more than 150 locations — and 25 private labels, including I.N.C., Charter Club and Alfani.
In Macy’s 2022 fiscal year ended on Jan. 28, the company generated about $1.2 billion of profit on $24.4 billion in revenue — a slight decrease from the $1.4 billion of profit on $24.5 billion in revenue in 2021.
The department store’s decrease in sales is no doubt outweighed by its cultural significance thanks to the annual Macy’s Thanksgiving Day Parade as well as its particularly appealing real-estate assets, which include its famed Herald Square flagship location in New York City.
Shareholder activists and private investment management company Starboard Value built up its stake in Macy’s back in 2015 in a bid to get the company to sell its prime real estate, estimating at the time that the move could boost Macy’s share price by more than 70%, according to The Journal.
Then in 2017, Canada’s Hudson’s Bay Co. reportedly knocked on Macy’s door.
Hudson’s Bay, which owns Lord & Taylor and Saks Fifth Avenue department stores, wanted to add Macy’s to its portfolio for an undisclosed amount, though the deal never crossed the finish line.
More recently, in 2021, Jana Partners — which had taken a 1.5% stake in the company the year prior — had urged Macy’s to spin off its e-commerce business like its luxury department store rival Saks Fifth Avenue had done.
Macy’s ultimately opted not to split its online business. “We are more confident as one integrated company,” Macy’s CEO Jeff Gennette said at the time.
Gennette — who’s set to retire next year and be replaced by Bloomingdale’s boss Tony Spring — has been executing a turnaround effort that turned down deals with shareholders in favor of shuddering underperforming locations and opening smaller-scale Macy’s department stores.
