Macy’s Receives $5.8 Billion Buyout Offer, According To Sources

Arkhouse Management and Brigade Capital Management have reportedly proposed an acquisition of Macy’s Inc. for $5.8 billion, as disclosed by insiders to CNBC on Sunday.

According to the sources, the offer sets the retailer’s value at $21 per share. Notably, Macy’s stock closed slightly above $17 per share on Friday, marking a decline of approximately 17% since the beginning of the year.

Arkhouse, specializing in real estate investments, and Brigade Capital, an asset management firm, are open to revising their bid upwards following a thorough due diligence process, as per the insiders. The consortium is already offering a premium for the struggling department store, which has faced challenges in competing with its online counterparts.

In a bid to attract customers to its physical stores, Macy’s has implemented various initiatives. In October, the company revealed plans for 30 new store locations in strip malls, signaling a departure from the conventional shopping mall model.

Despite these efforts, Macy’s sales have seen a 7% year-over-year decline. The retailer, however, expressed optimism following a recent quarter that surpassed Wall Street expectations. Notably, the improved performance was largely driven by the sales of Macy’s Inc.-owned brands such as Bloomingdale’s and Bluemercury, rather than the eponymous Macy’s chain.

Facing dwindling sales and stiff competition from both online rivals and brands opting for direct-to-consumer sales, Macy’s has emerged as an acquisition target. Similar scenarios unfolded in 2022 when Kohl’s experienced takeover bids, contending that the offers undervalued its business.

Retailers at large have grappled with challenges in 2023 due to fluctuating interest rates and high inflation affecting consumer spending. However, online shopping has displayed resilience in consumer spending, evident in robust sales during Black Friday and Cyber Monday. The strength of the holiday season remains uncertain, given cautious fourth-quarter outlooks issued by numerous retailers.

While Arkhouse and Macy’s have refrained from commenting on the matter, Brigade has yet to respond to CNBC’s request for comment. The initial report on the buyout offer was first made by The Wall Street Journal.

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