In a surprising turn of events, long-suffering Macy’s shareholders have found reason to celebrate this holiday season as the retail giant receives a substantial buyout offer. Real estate investor Arkhouse Management and asset manager Brigade Capital Management have extended a $5.8 billion proposal, according to an insider familiar with the matter, as reported by Yahoo Finance late Sunday. The offer, valuing Macy’s at approximately $21 per share, was formally submitted on December 1 and is currently under deliberation by the company’s board.
Macy not Responding Yet:
The Wall Street Journal initially broke the news on this significant development earlier on Sunday, shedding light on the 32.4% premium the offer represents over Macy’s closing price on November 30. While Macy’s has refrained from commenting on the matter, the stakes are high for the board, led by experienced retail figures such as former Home Depot CEO Frank Blake.
Macy’s, which once boasted an all-time high stock price of $70.99 on June 15, 2015, has seen its shares dwindle to $17.39 as of Friday’s close. Notably, in 2022, investment bank Cowen estimated the value of the retail giant’s real estate holdings to be between $6 billion and $8 billion. The company’s prized real estate portfolio includes the iconic Herald Square location in New York City, with valuations over the past decade ranging from $3 billion to $4 billion.
Strategies According to the Holiday Season:
Aside from evaluating the financial implications, Macy’s must weigh the potential disruption a buyout process could bring, especially considering the ongoing holiday shopping season. The results are scheduled for publication in mid to late February, coinciding with the transition of CEO responsibilities from Jeff Gennette to Tony Spring in February 2024.
Arkhouse Management and Brigade Capital Management’s offer adds a layer of complexity to the retail giant’s future, and the board faces the challenge of balancing shareholder interests, the company’s historical stock performance, and the potential impact on operations through 2024. The buyout bid comes at a time when traditional retailers like Macy’s grapple with increasing competition from online platforms and evolving consumer preferences, making the decision-making process even more critical for the iconic department store.
