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Investor Group Makes $5.8 Billion Offer to Take Macy's Private

The proposed acquisition by Arkhouse Management and Brigade Capital stands to reshape Macy's future.

An Arkhouse Management and Brigade Capital investor group has put forth a compelling bid of $5.8 billion to take department store chain Macy's. On December 1, the group submitted a proposal to purchase the remaining Macy's stock at $21 per share.

As per Reuters, citing a Wall Street Journal report, this generous offer represents a 20.76% premium from Macy's closing price of $17.39 on Friday.

Investor Group's Perspective

Arkhouse Management, a real-estate-focused investing firm, and Brigade Capital Management, a global asset manager, firmly believe that Macy's is undervalued in public markets. As such, they have highlighted their willingness to raise the offer after conducting due diligence.

Yahoo Finance reported that its goal is to demonstrate the potential for growth and value within Macy's. In support of their financial capability to finalize the deal, an investment bank has provided a letter of endorsement.

Having already acquired a substantial stake in Macy's through Arkhouse-managed funds, the investor group has engaged in discussions with the department store chain. Subsequently, the Macy's board convened to assess the offer. It remains unclear how the retailer views the proposal, as opinions within the company vary.

Arkhouse and Brigade have not previously engaged in a transaction of this magnitude. Two years ago, a $2.4 billion bid by a group of investors led by Arkhouse for a real estate investment trust, Columbia Property Trust, ended unsuccessfully when Pimco acquired Columbia Property for $3.9 billion.

Addressing Undervaluation and Financing

Arkhouse and Brigade remain committed to showcasing Macy's true worth. Their intention to address the undervaluation suggests a potential increase in the offer amount should necessary financing be secured. Reports indicate that the investor group has received substantial support from an investment bank in raising the required funds for the transaction.

Macy's remarkable performance has exceeded analysts' expectations for quarterly profits. Notably, the company successfully managed inventories more efficiently while satisfying the strong demand for beauty products in November. This accomplishment signals a positive trajectory for Macy's as they navigate the crucial holiday shopping season.

Currently valued at approximately $4.77 billion, Macy's market capitalization has experienced a decline of nearly 15.79% throughout the year. However, the recent news of the investor group's offer presents an opportunity for the company to regain its market position.

Photo: Nick Sarvari/Unsplash

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