NEW YORK: The US department store Macy’s, which has had financial troubles for years, announced it has rejected a US$5.8 billion takeover offer, citing reservations about its would-be investors’ financing capacity.
In a statement on Sunday, the company, which also owns the Bloomingdale’s store chain, confirmed it had received “an unsolicited, non-binding proposal from Arkhouse Management and Brigade Capital Management to acquire all of the outstanding shares of the company for US$21 per share in cash on December 1, 2023.”
Speculation about the US$5.8 billion deal has been swirling since the Wall Street Journal first reported on it in December.
However, Macy’s said the proposal “does not constitute a basis to enter into a non-disclosure agreement,” with Arkhouse and Brigade.
In a letter to the two firms cited in the statement, Macy’s chairman Jeff Gennette said he had “serious reservations” about their ability to finance the deal.
Arkhouse confirmed the bid in a statement published Sunday, adding that the offer to Macy’s represented a premium of almost 57% over the company’s adjusted 30-day average share price on November 30.
“We see the potential for a meaningful increase to our original proposal if we are granted access to the necessary due diligence,” Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell said in the statement.
“We have conviction in the long-term success of Macy’s but believe that its potential will only be realised as a private company,” they added.
Macy’s share price closed up more than 3.5% on Monday after the news was made public.
Department stores like Macy’s have seen their results suffer for years as consumers increasingly moved online, and have been forced to reduce in size — a trend exacerbated by the Covid-19 pandemic.
On Thursday, Macy’s announced it was cutting its workforce by 3.5%. According to its most recent annual report, the group employed around 94,500 people in 722 stores at the end of 2022.
Macy’s net profit more than halved in the third quarter to US$43 million, compared with US$108 million during the same period a year earlier.
The company’s sales fell by 7% to US$4.9 billion, with the decline seen in the same proportion in shops and online.
In its earnings results, the group announced plans to close fewer than 10 shops this year, citing an “uncertain macro-economic climate and the related pressures on consumers.”