Investor Threatens to Take Macy’s Offer to Shareholders
Arkhouse says it will take all ‘necessary steps’ to strike deal if talks fail to yield agreement
An investor that lodged a $5.8 billion bid to buy Macy’s M -1.67%decrease; red down pointing triangle threatened to bring the matter to shareholders if deal talks with the famed department-store chain don’t pick up.
Arkhouse Management and Brigade Capital Management on Dec. 1 submitted a proposal to acquire all of the outstanding Macy’s common stock they don’t already own for $21 a share, The Wall Street Journal previously reported.
After surging on the heels of the report, Macy’s stock has since given up a large part of those gains. It closed Friday at $17.63, giving the company a market capitalization of $4.8 billion.
The group, which has a sizable position through Arkhouse-managed funds, has met with Macy’s to discuss its offer privately, but with no agreement close, Arkhouse said Sunday it is ready to go directly to shareholders. That could entail launching a battle for board seats or a hostile takeover bid.
After the Journal reported on Arkhouse’s warning earlier Sunday, Macy’s rejected the offer, with Chief Executive Jeff Gennette saying in a statement: “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.” He added: “We continue to be open to opportunities that are in the best interests of the company and all of our shareholders.”
Arkhouse had said Sunday it could make a “meaningful increase” to its original proposal if it could proceed with necessary due diligence, as the Journal previously reported.
It offered to sign a mutual nondisclosure agreement to offer more information about its financing and strategy. Arkhouse had asked Macy’s to respond this week.
“We 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 this goal,” Arkhouse Managing Partners Gavriel Kahane and Jonathon Blackwell said in a statement. “We have conviction in the long-term success of Macy’s but believe that its potential will only be realized as a private company.”
The window for shareholder nominations at Macy’s opened on Saturday and closes Feb. 19, according to proxy materials.
Macy’s, which owns Bloomingdale’s in addition to its namesake department stores and Bluemercury beauty and skin-care shops, hadn’t previously issued a public response to the investor group’s offer. It is expected to provide more detail on its new strategy under incoming Chief Executive Tony Spring in the coming weeks.
There is no guarantee Arkhouse will follow through on its threats, and the campaign might fizzle. It is also possible another suitor for Macy’s could emerge.
Macy’s shares fell this past week after the company said Thursday in an employee memo that it planned to cut roughly 2,350 positions, or 3.5% of its overall workforce excluding seasonal hires. It also said it planned to shut five of its namesake department stores.
Macy’s has been working through a turnaround effort spearheaded by Gennette, who is set to retire next month and be succeeded by Spring, who oversees Bloomingdale’s. The turnaround effort has entailed closing hundreds of underperforming locations, opening smaller-format shops, launching new in-house brands and modernizing the company’s supply chain.
Macy’s has yet to disclose its holiday-season performance. The company is scheduled to report earnings in February.
Arkhouse is an investment firm that typically focuses on the real-estate industry. In 2021, it was part of a consortium that made an unsolicited bid for Columbia Property Trust, which put the office-real-estate investment trust into play. A different investor group ultimately agreed to buy Columbia Property for $2.2 billion.
Arkhouse also had a position in Preferred Apartment Communities, which was sold to Blackstone in a $5.8 billion deal two years ago.