No Deal: Macy’s formally ends buyout talks with Arkhouse and Brigade
After months of discussions, Macy’s, Inc. has ended negotiations with the activist group that wanted to take the retailer private in a deal valued at approximately $6.9 billion.
Real estate investment firm Arkhouse Management Co. LP and global asset manager Brigade Capital Management LP had been looking to acquire the department store giant since December 2023, when it made an all-cash offer of $21 a share, or about $5.8 billion, to acquire the company. The group upped their offer twice, with the most recent offer coming in at $24.80 a share, or $6.9 billion
In a statement released on Monday, Macy’s said its board unanimously determined to terminate discussions with Arkhouse and Brigade, saying that the proposal remains non-actionable and failed to provide compelling value to Macy’s shareholders.
“At this time, after careful review, we have concluded that Arkhouse and Brigade’s proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources, and information shared during this process,” Macy lead independent director Paul Varga said in the release.
Macy’s said it spent hundreds of hours addressing Arkhouse and Brigade’s extensive diligence requests, facilitating diligence meetings with multiple members of the company’s senior management as well as its financial and real estate advisors. It also said it provided thousands of documents with a level of detail “that went well beyond what is customarily required to obtain financing for a public company acquisition,” such as providing complete store-by-store profit and losses and full-form leases for each Macy’s, Bloomingdale’s and Bluemercury location
In April, Macy’s avoided a proxy fight with Arkhouse by appointing two of the firm’s nominees — Richard (Ric) Clark and Richard (Rick) L. Markee — to its its 15-person board board of directors. The two managing partners of Arkhouse issued a statement saying the two board appointments would aid the company’s continuing efforts to purchase Macy’s.
New Strategy
In its statement ending the negotiations, Macy’s said its management team will return its full focus to enhancing shareholder value through the execution of its "A Bold New Chapter” strategy. Unveiled in February under the leadership of new CEO Tony Spring, the plan involves closing closing approximately 150 underperforming Macy’s locations and prioritizing investment in approximately 350 “go-forward” nameplate locations.
The strategy also involves an increased focus on luxury and beauty, with the opening of about 15 Bloomingdale’s stores and at least 30 Bluemercury stores during the next three years.
[READ MORE: Macy’s to close 150 nameplate stores, expand off-mall and luxury formats]
“The company has seen early signs of wins, supported by a steady pace of omnichannel initiatives being developed and capital-light investments focused on better serving customers,” Macy’s stated. “Even in this dynamic consumer environment, the company has seen progress within its first 50 Macy’s nameplate stores, which are already outperforming other go-forward locations.
Macy’s said it will share additional detail on the progress underway on its new strategy as part of its second quarter 2024 earnings report next month.
