Macy’s Rejects Acquisition Proposal from Arkhouse and Brigade Capital Management

Summary

  • Real estate investing firm Arkhouse Management and global asset manager Brigade Capital Management have offered to acquire the remaining shares of Macy’s for $21 per share.
  • The investor group believes the initial offer may potentially increase if they gain access to the necessary due diligence.
  • However, Macy’s rejected the proposal, refusing to provide any due diligence information to Arkhouse and Brigade due to a “lack of compelling value” in the proposal.
  • Despite the rejection, experts suggest that Arkhouse and Brigade might unlock more value in Macy’s even without the deal being clinched.
  • Concerns arise over the financing of the transaction and the amount of control Arkhouse and Brigade have over Macy’s shares.
  • Macy’s current struggles with job cuts, closing stores, and competition from online retailers bring attention to the underappreciation of the company’s real estate value.

Investor Group Proposal for Macy’s

Earlier on Sunday, Arkhouse Management, together with Brigade Capital Management, revealed their plan to buy all outstanding shares of Macy’s (NYSE:) for $21 per share. The investor group stated that their initial offer could increase significantly if provided access to the necessary due diligence process, according to Arkhouse’s statement.

Rejection of Proposal by Macy’s

However, Macy’s declined the proposal. In a statement, Macy’s pointed out the lack of compelling value in the proposal as the reason for not providing any due diligence information to Arkhouse and Brigade. Macy’s also expressed concerns over the investors’ ability to finance the proposed transaction, as the information presented by Arkhouse and Brigade failed to alleviate these worries.

Investment Experts’ Opinions

Last month, investment bankers and analysts predicted that although Arkhouse and Brigade might not clinch a deal for Macy’s, the firms might be successful in unveiling more value in the company. Arkhouse disclosed that they, along with Brigade Capital Management, hold a substantial stake in Macy’s through Arkhouse-managed funds.

Financing Concerns

A significant concern for Macy’s is the uncommitted financing peppered with numerous non-standard preconditions. Acting as the financial adviser for the buyout group, investment bank Jefferies confirmed their confidence in the group’s ability to raise the necessary funds for the transaction.

Real Estate Value

The current bid by the investment firms has highlighted the undervaluation of Macy’s in relation to its real estate, which analysts estimate to be worth between $7.5 billion to $11.6 billion.

Challenges Facing Macy’s

Macy’s has faced challenges as it competes with younger, online retailers and struggles with downsizing, which includes cutting 2,350 jobs and closing five stores with the aim of streamlining operations.

The latest developments in Macy’s could have implications for forex or trading, particularly in relation to assets tied to the retail and real estate sectors.

PIP Penguin
Logo