Macy’s Inc. Closes Door on Proposed Takeover Deal

New York – After months of talks and due diligence, Macy’s Inc. is ending its partnership with Arkhouse Management Co. and Brigade Captial Management, which had been pushing to delist the company since December 2023.

The retailer now aims to double down on its efforts as part of its “Bold New Chapter” strategy, which it unveiled in February.

In March of this year, Macy’s entered into a confidentiality agreement with Arkhouse and Brigade as part of the due diligence process after the parties raised their initial takeover offer from $21.00 per share to $24.00 per share and stated they were open to raising the price further after reviewing the accounting.

“The company has since devoted hundreds of hours to processing Arkhouse and Brigade’s extensive due diligence requests, facilitating due diligence meetings with numerous members of the company’s senior management team, as well as its financial and real estate advisors, and providing thousands of documents with a level of detail that goes beyond what is typically required to obtain financing for a public company acquisition, such as providing complete store-by-store income statements and full lease agreements for every Macy’s, Bloomingdale’s and Bluemercury location. The company has also permitted Arkhouse and Brigade to contact more than a dozen credible financing sources and share confidential information with them,” the retailer said in an announcement this morning.

When all was said and done, Macy’s is backing off for the same reason it rejected its original offer in January: skepticism about the parties’ ability to obtain adequate financing and doubts about the value of the privatization deal.

Failure to meet expectations

Arkhouse and Brigade were set to submit a “final, fully funded and enforceable” takeover proposal on June 25, the retailer said today. Instead, they submitted a “check in” letter expressing interest in acquiring all of the outstanding shares of Macy’s Inc. for $24.80 per share in cash, Macy’s said.

Macy’s said the application consisted of “highly conditional and unsigned draft financial commitment letters, subject to numerous conditions, including, in some cases, due diligence by Arkhouse and Brigade.”

Much of the proposed financing was tied to the value of Macy’s real estate, it added. Macy’s advisers had previously made clear that Arkhouse and Brigade needed to gather “enterprise-level” financial commitment documents, it said.

“Our team remains single-mindedly focused on creating value for our shareholders,” said Tony Spring, chairman and CEO of Macy’s, Inc. “While this is early days, we are pleased that our initiatives have gained traction, reinforcing our belief that the company can return to sustainable, profitable growth, accelerate free cash flow generation and unlock shareholder value.”

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