Macy’s rejects buyout offer amid financing concerns

Macy’s Inc. has rejected an unsolicited bid that would take the department store giant private in a  $5.8 billion deal.

After nearly two months of silence, Macy's on Sunday confirmed that it received an unsolicited, non-binding proposal from Arkhouse Management Co. LP and Brigade Capital Management, LP to acquire all the outstanding shares of the company for $21.00 per share in cash on December 1, 2023. The retailer said the firms failed to address the board’s concerns regarding their ability to finance the proposed transaction and that there was a “lack of compelling value” in the proposal.

“Following careful consideration and efforts to gather additional information from Arkhouse and Brigade, the board determined that Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s, Inc. shareholders,” stated Macy’s chairman and CEO Jeff Gennette, who will hand the reins of the company to Tony Spring in February. 

In a letter sent by the Macy’s board sent to Arkhouse and Brigade, the retailer said, “Should you have anything new to share, we continue to be open to opportunities that are in the best interests of Macy’s, Inc. and all of our shareholders.”

Arkhouse, for its part, is not backing down. On Sunday, Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell issued a statement in which they threatened to bring the matter directly to Macy’s shareholders if talks do not pick up this week. 

“We see the potential for a meaningful increase to our original proposal if we are granted access to the necessary due diligence and, to that end, have offered to sign a mutual non-disclosure agreement to conduct this due diligence,” the statement read. 

The partners added that they have “conviction” in the long-term success of Macy’s,  but believe that its potential will only be realized as a private company.

“We believe Macy’s investors support a privatization given the stock’s largest single-day gain in more than two years following media reports of our interest in acquiring the company,” they stated..

The partners added they are “highly motivated to consummate an acquisition of Macy’s” and are prepared to pursue all necessary steps, including direct engagement with stockholders, to achieve it.

Last week, Macy's announced it was closing five stores and laying off about 3.5% of its workforce as it prepares to unveil a new strategy.