Macy’s board of directors has rejected a $6.9 billion takeover bid by a pair of hedge funds, ending seven months of talks.
The offer from Arkhouse Management and Brigade Capital Management “remains non-actionable and fails to provide compelling value to Macy’s, Inc. shareholders,” said a statement from the department store chain.
Arkhouse and Brigade first approached Macy’s in December 2023, with a $5.8 billion bid valued at $21 a share. They subsequently raised their offer to $24 a share and finally to $24.80.
Macy’s board said it asked the prospective new owners to submit “fully negotiated commitment papers for all the debt and equity needed to finance the revised proposal” by June 26. Instead, they submitted a “check-in letter,” which the board dubbed “insufficient,” as it provided little confidence the offer was viable.
“The company’s financial advisers [made] it clear that ‘enterprise level’ commitment papers would be required,” the statement said. “Arkhouse and Brigade delivered ‘asset-based’ financing commitment papers tied to the valuation of the company’s owned real estate, and subject to appraisals, credit rating outcomes, and loan-to-value threshold.”
Eventually the board determined the negotiations were becoming a distraction, as the retailer wanted to concentrate on the launch of its “Bold New Chapter” strategy.
“Other than seeking to monetize Macy’s real estate assets for short-term gain, neither [hedge fund] brought any long-term value to the table,” Neil Saunders, managing director of research consultancy GlobalData, told the Associated Press. “Indeed, many of the activist investor proposals would have significantly weakened Macy’s and hampered its ability to survive as a retail operation.”
The turndown led to a plunge in Macy’s stock, which closed at $19.11 a share on Friday and was trading at $16.80 at press time.
Arkhouse and Brigade could not be reached for comment.
Top: Macy’s flagship in New York City (photo courtesy of Macy’s)
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