The activist investor group seeking to buy Macy’s increased pressure on the department store chain on Sunday, increasing its offer and providing more details about its financing plans.
Arkhouse Management and Brigade Capital Management said in a news release that they would now offer $24 per share, valuing the retailer at $6.6 billion. The new offer is higher than the last proposed $21 per share and a 33.3 percent premium to Macy’s stock closing price of $18.01 on Friday.
Arkhouse and Brigade named additional investors they had brought on as equity partners: Fortress Investment Group and One Investment Management. Arkhouse and Brigade, in an apparent response to Macy’s questions about funding, also said they had “identified major global institutional funding sources” that represent “100 percent of the capital required to purchase the shares of Macy’s that we still have.” don’t own it.”
The retailer has been under pressure from the investor group since December, when the group made an offer that would take Macy’s private in a deal valued at $5.8 billion. Arkhouse said the retailer may accept its offer to shareholders if it doesn’t start sharing nonpublic information. The investor has since nominated nine people to Macy’s board.
Macy’s said Sunday it would “carefully review and evaluate” the latest proposal.
“Macy’s Inc.’s Board of Directors has a proven track record of evaluating a broad range of options to create shareholder value, is open to the best path to achieve this goal, and is committed to continuing to take actions that it believes will achieve the goal “The best interests of the company and all Macy’s Inc. shareholders are the best interests,” the company said in a statement.
The retailer has tried to remain focused on its own store turnaround strategy.
Last week, Macy’s announced a strategy that would fundamentally change the makeup of the company. The company said it would close 150 of its namesake stores over three years while opening additional locations of its upscale Bloomingdale’s and Bluemercury chains.
“I hope we can complete the business before these store closures begin,” Gavriel Kahane, managing partner at Arkhouse, said in an interview.
Matt Perkal, partner and head of special situations at Brigade, said that “the proposal represents the best path forward for Macy’s shareholders by allowing them to benefit from the company’s significant unrealized value.”
As a department store, Macy’s has struggled to attract customers who are increasingly shopping in an e-commerce world as indoor malls close. Macy’s has seen declining sales in recent quarters.
New CEO Tony Spring, who spent his four-decade career at Bloomingdale’s, has admitted that the shopping experience at Macy’s is not a pleasant one. Shoppers often encounter messy stores with poorly displayed clothing and have difficulty finding staff. The retailer said it plans to have 350 remaining locations by the end of 2026 and to channel capital gained from its closures into remaining stores.
Mr. Kahane said if the company were privatized, investors would focus on turning around the department store business, a feat he said would be easier if the retailer were a private company. He also pushed back against speculation from analysts that he only wanted the retailer for its real estate.
“So we are definitely here for real estate law,” Mr. Kahane said. “We’re here because we believe they have a lot of real estate on the balance sheet and that real estate is valuable because they have a great tenant.”
He downplayed speculation by some retail analysts that investors were simply hoping for another buyer to beat them to the punch.
“I’ll feel a lot worse if someone comes in here and beats us,” Mr. Kahane said. “I would be a lot more surprised too.”
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2024-03-04 01:39:45
www.nytimes.com
