Macy’s Ends Buyout Talks With Activist Investors

Macy’s board unanimously voted to terminate discussions with Arkhouse Management and Brigade Capital, two activist investor groups that had been looking to take the department store chain private in a $6.9 billion deal, the retailer announced Monday.

Arkhouse and Brigade have “failed to lead to an actionable proposal with certainty of financing at a compelling value,” the company said, effectively closing the door on the prospect of a buyout and ending a months-long skirmish with Arkhouse, a real estate hedge fund. Looking ahead, Macy’s will prioritise its turnaround strategy under CEO Tony Spring, which entails eliminating 25 percent of its retail footprint and improving the shopping experience.

Macy’s shares fell sharply on the news to $16.62 Monday morning, trading 13 percent lower than its closing price Friday of $19.09.

Arkhouse and Brigade submitted their initial bid in December 2023, offering $5.8 billion or $21 per share for the ailing American chain. Macy’s rebuffed that offer. In February, Arkhouse Management launched a proxy fight at Macy’s, nominating nine new directors on Macy’s board for election.

The following month, the firms increased their offer to $24. The two parties entered an agreement for due diligence, since which the retailer said it has spent “hundreds of hours” reviewing documents, taking meetings and addressing their requests. In April, Macy’s agreed to add two of Arkhouse’s candidates to its 15-person board, naming them to the finance committee tasked with reviewing Arkhouse’s take-private bid.

In late June, Arkhouse and Brigade raised their proposal once more to $24.80 per share, Macy’s said, but the price was still below the range that it had informed its pursuers was compelling in March.

The financing proposal was also conditional and lacked full commitment as well as actionable steps, the board had decided.

To maximise the value of the company to shareholders, its best bet is prioritising Macy’s “Bold New Chapter” strategy, Paul Varga, lead independent director of Macy’s, Inc. said in a statement.

Shortly after chief executive Tony Spring took the helm in February, Macy’s introduced its new turnaround strategy that entails culling one-fourth of its retail footprint, growing its luxury segment Bloomgindale’s and improving the customer shopping experience.

“While it remains early days, we are pleased that our initiatives have gained traction,” Spring said in the announcement Monday.