Macy's Rejects Take Over Bid
Macy’s has rejected a take over bid valued at approximately $5.8 billion but officials with the department store said they are “open to opportunities” in the future.
The solicitation from Arkhouse Management Co. LP and Brigade Capital Management, LP offering $21 per share in cash dates back to December 1, 2023. In a company press release, Macy’s said a review of the proposal by the board of directors along with legal, financial and real estate advisors raised several “concerns.”
Macy’s said it had requested additional information from Arkhouse and Brigade, but that information received failed to address the board’s concerns regarding Arkhouse’s and Brigade’s ability to finance their proposed transaction.
As recently as January 15, Macy’s financial advisors asked Jefferies, Arkhouse and Brigade’s financial advisor, whether there were any updates on the financing plan available to share with (the board) and no additional information was provided.
“The Macy’s, Inc. board of directors and management team have a proven track record of evaluating a broad range of options to enhance shareholder value,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “Following careful consideration and efforts to gather additional information from Arkhouse and Brigade, the board determined that (the) proposal is not actionable and that it fails to provide compelling value to shareholders. We continue to be open to opportunities that are in the best interests of the company and all of our shareholders.”
In a letter to Arkhouse and Brigade, Gennette outlined several of Macy’s concerns. Among them was the 25% cash equity contribution of the required capital, which he said is well below current market values for similar transactions. Consequently, the proposed overall leverage is well in excess of what could likely be achieved in the current marketplace and sustainable for a company in (Macy’s) sector, he wrote.
“Based upon advice the board has received, we believe that this quantum of indebtedness, as well as your reliance on a large amount of payment-in-kind securities, make it highly unlikely that your proposed financing structure could be successfully executed,” Gennette said.
The rejection of the takeover bid comes just days before Gennette will retire as Macy’s CEO. As previously announced in March of 2023, Gennette will step down and be replaced by Tony Spring, who has served as executive vice president and Bloomingdale’s chairman and CEO.
