Investor group launches $7.8 billion buyout bid for iconic department store chain Macy’s
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Stiff competition from online rivals has taken a big bite out of the value of the iconic US department store chain.
PHOTO: AFP
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New York – An investor group has made a US$5.8 billion (S$7.8 billion) offer to take iconic department store chain Macy’s private, after stiff competition from online rivals took a big bite out of its value, according to a person familiar with the matter on Dec 10.
Arkhouse Management, a real estate focused investing firm, and Brigade Capital Management, a global asset manager, submitted a proposal to acquire the Macy’s stock they do not already own for US$21 a share on Dec 1, the person said.
The Wall Street Journal reported the offer earlier.
The offer for the Bloomingdale parent is a 20.76 per cent premium from its closing at US$17.39 on Dec 8.
The group already has a big stake in Macy’s through Arkhouse-managed funds and has discussed the proposal with the department store chain, whose board subsequently met to discuss the offer.
It is not clear how the retailer views the proposal, the person familiar with the matter said.
Arkhouse and Brigade believe Macy’s is undervalued in the public markets and have indicated that it would be willing to raise its offer subject to due diligence, the WSJ report said, adding that an investment bank has provided a letter supporting the group’s ability to raise the necessary financing to get through the deal.
Macy’s, Arkhouse and Brigade did not immediately respond to a Reuters request for comment on the report.
The retailer crushed analysts’ estimates for quarterly profit on lower inventories and strong demand for beauty products in November, signalling that attempts to trim inventory from 2022 highs were finally working ahead of the all-important holiday shopping season.
Macy’s has a market capitalisation of about US$4.77 billion and its shares are down nearly 15.79 per cent in 2023.
It is unclear whether Arkhouse and Brigade have the resources to execute on a deal of such a size, given that they have not previously done anything of this magnitude.
A US$2.4 billion bid that a group of investors led by Arkhouse submitted two years ago for real estate investment trust Columbia Property Trust was unsuccessful.
Pimco subsequently acquired Columbia Property for US$3.9 billion. REUTERS
