Macy's store in Herald Square in New York City on December 11, 2023.
Michael M. Santiago | Getty Images
Macy's on Sunday rejected a $5.8 billion proposal by Arkhouse Management and partner Brigade Capital Management to take the department store operator private, citing concerns about deal financing and valuation.
Arkhouse Management, a specialist real estate investment firm, and Brigade Capital Management, a global asset management company, have submitted a proposal to acquire Macy's stock they do not already own for $21 per share. , Ark House confirmed early Sunday.
Ark House said in a statement that the investor group sees “potential for a significant increase from the original offer, subject to access to the necessary due diligence.”
Macy's rejected the offer.
Macy's said in a statement that the offer “lacks compelling value” and that its “board of directors has decided not to enter into non-disclosure agreements or provide due diligence information to Ark House and Brigade.” said.
Macy's also said that the information provided by Arkhouse and Brigade “failed to address the board's concerns regarding Arkhouse and Brigade's ability to finance the proposed transaction.”
Investment bankers and analysts said last month that Arkhouse and Brigade were unlikely to close a deal with Macy's, but the company could succeed in unlocking more value.
ArkHouse said a group of investors led by ArkHouse & Brigade Capital Management has a significant stake in Macy's through funds managed by ArkHouse.
Arkhouse said investment bank Jefferies, which is acting as financial advisor to the acquisition group, “has provided us with a very confident letter confirming our ability to raise the necessary financing for the transaction.”
Macy's said it was concerned about the unconditional financing, which comes with a number of non-standard preconditions.
The investment firm's bid focuses on how Macy's is undervalued relative to the company's real estate, which analysts predict is worth between $7.5 billion and $11.6 billion.
Macy's owned 316 of its 722 stores at the end of January, according to its most recent annual report.
Macy's announced last week that it would cut 2,350 jobs and close five stores in an effort to streamline its operations.
Like other traditional department stores, Macy's has struggled to compete with younger online competitors whose physical stores are much smaller.
