Macy’s Refuses $5.8 Billion Bid from Arkhouse, Citing Financing Concerns

Macy’s department store has formally declined a proposal from Arkhouse Management and Brigade Capital Management to take the company private for $5.8 billion, citing concerns about the financing and valuation of the deal.

The proposal put forward by Arkhouse Management and Brigade Capital Management involved acquiring the remaining shares of Macy’s for $21 per share. However, Macy’s has refused their offer, stating that they will not enter a non-disclosure agreement or provide any due diligence information to the investor group, citing a lack of compelling value in the proposal and concerns regarding the ability to finance the transaction.

Despite the rejection, Arkhouse has indicated that they see significant potential for increasing their proposed bid if granted access to the necessary due diligence. The investor group has a substantial stake in Macy’s through Arkhouse-managed funds.

Moreover, Macy’s has expressed concerns about the uncommitted financing with numerous non-standard preconditions put forward by Arkhouse and Brigade, questioning their ability to finance the proposed transaction.

The bid from Arkhouse and Brigade has brought attention to the undervaluation of Macy’s in relation to its real estate. Analysts have projected the company’s real estate to be worth between $7.5 billion to $11.6 billion, with Macy’s owning 316 of its 722 total stores as of January.

Additionally, Macy’s has been facing challenges in the retail landscape, as it announced plans to cut 2,350 jobs and close five stores in an effort to streamline operations. This move comes as traditional department stores struggle to compete with younger, online retailers with smaller physical store presence.

In conclusion, while Macy’s has rejected the bid from Arkhouse and Brigade, the proposal has brought attention to the value of the company’s real estate and the challenges faced by legacy department stores in the modern retail environment. It remains to be seen how this development will impact the future of Macy’s and potential investment opportunities in the retail sector.