[Update from 3/4/2023] Arkhouse Management is not relenting in its effort to take over Macy’s, upping its acquisition price to $24 per share after Macy’s rejected its previous offer of $21 per share. The new unsolicited buyout bid comes just weeks after Arkhouse launched a proxy battle for control of the company with the nomination of nine new board directors.
Macy’s confirmed in a statement that it had received the new bid and said it would “carefully review and evaluate the latest proposal,” noting that the current board “is open-minded about the best path” to achieve results for its shareholders. Just last week, newly installed Macy’s CEO Tony Spring unveiled the company’s Bold New Chapter strategy, designed to “challenge the status quo and create a more modern Macy’s.”
As Arkhouse noted in a press release, the firm’s revised buyout offer represents a 51% premium on Macy’s share price from Nov. 30, 2023, when the group submitted its first bid, and a 33% premium on the share price of $18 at market close on March 1, 2024. Shares in Macy’s, Inc. were up 16% in early trading on March 4 on news of the bid.
Original story begins-
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Real estate investment firm Arkhouse Management has put forward a slate of nine nominees in an attempt to take control of the Macy’s, Inc. board, after the retailer rejected a takeover bid from Arkhouse earlier this year. The slate of nominees includes former executives from retailers including Hudson’s Bay Co., Target, Victoria’s Secret and Vitamin Shoppe.
Arkhouse first put forward its takeover offer in conjunction with asset manager Brigade Capital in December 2023, offering to buy the company for $5.8 billion (a price that valued the company’s stock at $21 a share, a 23% premium on the current trading price at the time) and take it private. Macy’s ignored the offer until Arkhouse and Brigade pushed for a response in January 2023, following news of plans for layoffs and store closures as new CEO Tony Spring prepared to take the reins.
Macy’s eventually did respond, with current CEO Jeff Gennette saying in a statement that the company’s board had determined that “Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s, Inc. shareholders.”
In light of that rejection, Arkhouse — which said it has a 4.4% “economic exposure” in Macy’s — has launched a proxy fight to gain control of the 14-person Macy’s board with nine of its own nominees. Arkhouse Managing Partners Gavriel Kahane and Jonathon Blackwell said in a statement that the company has been privately working with the Macy’s board to resolve concerns about its takeover offer, namely Arkhouse’s financing sources and the purchase price. “We also reminded the board that we remain optimistic that we will be able to increase the proposed purchase price based on customary due diligence, which the company has refused to grant us,” added Kahane and Blackwell.
The partners say they also asked that the Macy’s board extend the Feb. 19 deadline for director nominations so they could “continue to engage privately,” but the board refused, prompting Arkhouse’s nominations.
“The board’s history of poor performance and continued refusal to engage constructively with our credible and motivated buyer group have led us to the decision to nominate a slate of highly qualified, independent directors to reconstitute Macy’s board,” said Kahane and Blackwell in a statement. “While we do not make this decision lightly, we did so to preserve our ability to protect the rights of all shareholders. We firmly believe that our slate of nominees possesses the necessary backgrounds and expertise to evaluate all potential avenues to unlock the substantial unrealized value at the company that the current directors appear unwilling to pursue.”
Arkhouse’s nine-member slate of director candidates includes:
- Former Brookfield Property Group CEO Richard Clark, now Co-founder and managing partner of WatermanCLARK;
- Former Hudson’s Bay Co. Director and Target Vice Chairman Gerald Storch, now CEO of Storch Advisors;
- Former CEO of Victoria’s Secret and Neiman Marcus Direct Sharen J. Turney;
- Current Five Below board member and former Vitamin Shoppe CEO Richard Markee;
- Mitchell Schear, Founder of the real estate-focused investment firm 10Square and former President of real estate companies including Vornado/Charles E. Smith;
- Mohsin Meghji, Former Chief Restructuring Officer of Sears Holdings Corp. and Barney’s;
- Andrea Weiss, formerly a senior leader at retailers including Ann Taylor, Bath & Body Works, Guess? and L Brands;
- Nadir Settles, Global Head of Impact Investing at Nuveen Real Estate; and
- Isaac Zion, Managing Principal at Acram Group.
In response to the nominations, the Macy’s board issued a statement rejecting Arkhouse’s claims of mismanagement and reiterated its ongoing turnaround strategy.
“Arkhouse and Brigade have yet to provide any financing details that would enhance the actionability of their [takeover] proposal despite multiple opportunities to do so, and instead of attempting a constructive dialogue, Arkhouse has chosen to launch a proxy contest,” said the Macy’s board in a statement. “Notwithstanding the sole objective of Arkhouse is a sale of Macy’s Inc., our Nominating and Corporate Governance Committee will evaluate Arkhouse’s director candidates. We value the perspectives of Macy’s, Inc. shareholders and look forward to an ongoing dialogue with them about our performance, strategic direction and value creation opportunities.”
