Thursday, April 25

Activist Investor’s Group raises bid for Macy’s

The activist investor group seeking to buy Macy’s increased pressure on the department store chain on Sunday, increasing its offer and disclosing additional details about its financing plans.

Arkhouse Management and Brigade Capital Management said in a press release that they were now offering $24 per share, valuing the retailer at $6.6 billion. The new offer is up from the $21 per share last offered and at a 33.3 percent premium to Macy’s stock’s closing price of $18.01 on Friday.

Arkhouse and Brigade named other investors they had brought on board as financial partners, Fortress Investment Group and One Investment Management. Arkhouse and Brigade also said, apparently in response to questions from Macy’s about its financing, that they had “identified significant global institutional financing sources” that “represent 100% of the capital required to purchase the Macy’s stock that we do not We don’t have it yet.”

The retailer has faced pressure from the investor group since December, when the group submitted a bid to take Macy’s private for $5.8 billion. Arkhouse said that unless the retailer starts sharing non-public information, it could take its offer to shareholders. The investor has since named nine people to Macy’s board of directors.

Macy’s said Sunday it would “carefully review and evaluate” the latest proposal.

“The Macy’s Inc. Board of Directors has a proven track record of evaluating a broad range of options to create shareholder value, is open-minded about the best path to achieving this goal and undertakes to continue to take the measures it considers to be best. interests of the Company and all Macy’s Inc. shareholders,” the company said in a statement.

The retailer is working to stay focused on its own business turnaround strategy.

Last week, Macy’s announced a strategy that would significantly change the makeup of the company. It announced it would close 150 of its namesake stores over a three-year period, while opening more Bloomingdale’s and Bluemercury stores, its high-end chains.

“I hope we manage to close the business before we start these store closures,” Gavriel Kahane, managing partner at Arkhouse, said in an interview.

Matt Perkal, partner and head of special situations at Brigade, said “the proposal presents 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 win over customers who are increasingly shopping in an e-commerce world as enclosed malls close their doors. Macy’s has seen declining sales in recent quarters.

Its new chief executive, Tony Spring, who spent a four-decade career at Bloomingdale’s, acknowledged that the shopping experience at Macy’s was not pleasant. Shoppers often find themselves in messy stores with poorly displayed clothing and struggle to find staff. The retailer said it plans to have 350 stores remaining by the end of 2026 and that capital generated from its closures will be paid to the remaining stores.

Mr Kahane said if the company went private, investors would focus on turning around the department store business, a feat he said would be easier if the retailer was a private company. He also pushed back against speculation from analysts that he wanted the retailer purely for its real estate holdings.

“So we are clearly here for real estate law,” Mr. Kahane said. “We’re here because we think they have a lot of real estate on their balance sheet, and that real estate is valuable because they have a great tenant..”

He played down speculation by some retail analysts that investors were simply hoping another buyer would rush in front of them.

“I will feel much worse if someone comes in and beats us here,” Mr. Kahane said. “I would also be much more surprised.”