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Macy’s Ends Buyout Talks
The retailer will not be making a deal with Arkhouse Management and Brigade Capital Management, opting to focus on its turnaround plan.
The Macy’s flagship store in New York’s Herald Square. The retailer announced this week that it has ended buyout talks with two firms, Arkhouse Management and Brigade Capital Management, after more than seven months of negotiations.
New York—Macy’s Inc. has ceased discussions with its potential buyers, the company announced Monday.
In March, real estate investment firm Arkhouse Management and asset management firm Brigade Capital Management offered the department store chain a buyout deal worth $6.6 billion.
It was their second offer after the retailer declined their initial offer of $5.8 billion in December 2023.
Macy’s had been considering the revised offer, opening its books to the firms in April.
However, its board of directors unanimously have decided to end discussions with Arkhouse and Brigade.
“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,” said Paul Varga, lead independent director of Macy’s.
Related stories will be right here …
In March, real estate investment firm Arkhouse Management and asset management firm Brigade Capital Management offered the department store chain a buyout deal worth $6.6 billion.
It was their second offer after the retailer declined their initial offer of $5.8 billion in December 2023.
Macy’s had been considering the revised offer, opening its books to the firms in April.
However, its board of directors unanimously have decided to end discussions with Arkhouse and Brigade.
“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,” said Paul Varga, lead independent director of Macy’s.
Macy’s said it had been working “in good faith” with Arkhouse and Brigade for more than seven months now, with the understanding that there was a willingness to possibly increase the purchase price to an amount Macy’s board might accept.
Following “hundreds of hours” of due diligence, the involved companies agreed that Arkhouse and Brigade would deliver a fully financed and actionable proposal to Macy’s by June 25.
The offer was to include the best purchase price per share and fully negotiated commitment papers for all the debt and equity needed to finance the deal.
On June 26, Arkhouse and Brigade instead sent Macy’s a “check in” letter, said the retailer, with an increased bid of $24.80 per share.
Though slightly higher than the second offer of $24 per share, it was within a range that Macy’s board already had said was “not compelling.”
In addition, the financing papers submitted to Macy’s were “insufficient,” leading the board to believe that a viable offer cannot be reached within a reasonable period of time.
Macy’s said its management team instead will focus on increasing shareholder value through its latest turnaround plan, called “A Bold New Chapter.”
Announced in February, the plan includes closing 150 stores over the next three years as it grapples with declining sales.
The three pillars of the strategy are: strengthening the Macy’s brand, accelerating luxury growth, and simplifying and modernizing end-to-end operations.
Macy’s Chairman and CEO Tony Spring said, “Our team continues to be singularly focused on creating value for our shareholders. While it remains early days, we are pleased that our initiatives have gained traction, reinforcing our belief that the company can return to sustainable, profitable growth, accelerate free cash flow generation, and unlock shareholder value.”
The board is open to exploring all paths to increased shareholder value, added Varga, and believes the new strategy is the best opportunity for doing so.
Macy’s said it will share additional details about how the strategy has been working so far as part of its second-quarter earnings, which it will report next month.
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