A group of activist investors seeking to buy Macy's Inc. ramped up pressure on the department store chain on Sunday, raising its offer and revealing more details about its financing plans.
Arkhouse Management and Brigade Capital Management said in a news release that they currently have an offer of $24 per share, valuing the retailer at $6.6 billion. The new offer is up from the previous offer of $21 per share and represents a 33.3% premium to Macy's stock price of $18.01 on Friday's closing price.
Arkhouse and Brigade have named Fortress Investment Group and One Investment Management as additional investors who have been brought on as equity partners. Arkhouse and Brigade also said in an apparent response to questions about Macy's financing that it would “represent 100 percent of the capital needed to purchase Macy's stock we don't already own” and “a large “We have identified a number of global institutional funding sources.”
The company has faced pressure from an investor group since December, when they submitted a bid to take Macy's private for $5.8 billion. Ark House said it may accept the offer to shareholders as long as the retailer does not begin sharing non-public information. Investors then nominated nine people to Macy's board of directors.
Macy's said Sunday it would “carefully consider and evaluate” the latest offer.
“Macy's Board of Directors has a track record of evaluating a wide range of options to create shareholder value, is open-minded about the best path to achieving this objective, and is committed to taking the actions it believes are best.” “We are committed to continuing to serve the interests of the company and all Macy's stockholders,” the company said in a statement.
The retailer plans to continue focusing on its own strategy to turn around the business.
Last week, Macy's announced a strategy that would significantly change the structure of the company. The company announced it would close 150 stores with the same name over three years, while opening additional stores in the upscale chains Bloomingdale's and Bluemercury.
“We hope to complete the transaction with the company before store closures begin,” Gabriel Kahane, Ark House's managing partner, said in an interview.
“This proposal presents the best path forward by allowing Macy's shareholders to benefit from the company's significant unrealized value,” said Matt Parkal, Partner and Head of Special Situations at Brigade. It is a thing,” he said.
As a department store, Macy's is struggling to attract customers who increasingly shop in the world of e-commerce while enclosed malls are closed. Macy's has recorded declining sales in recent quarters.
The company's new chief executive, Tony Spring, who spent 40 years at Bloomingdale's, acknowledged that the shopping experience at Macy's is not a pleasant one. Shoppers often encounter cluttered stores with poorly displayed clothing and struggle to find staff. The company said it plans to have 350 stores remaining by the end of 2026 and that the proceeds from the closures will flow to the remaining stores.
Mr. Kahane said investors would focus on rebuilding the department store business if the company went private, which he argued would be easier if the retailer was privately held. He also disputed analyst speculation that he is only looking to retailers for their own real estate.
“So we're obviously here for real estate rights,” Kahane said. “We're here because we think they have a lot of real estate on their balance sheet, and that real estate is valuable because they have great tenants in it.””
He downplayed speculation from some retail analysts that investors were simply hoping another buyer would jump in front of them.
“I would feel even worse if someone came in here and beat us,” Kahane said. “I think you'll be even more surprised.”
