Macy’s board of directors has unanimously agreed to terminate buyout discussions with Arkhouse Management and Brigade Capital Management following months of negotiations that included several bid increases and a board proxy battle.
In a statement, the Macy’s board said that months of discussions “have failed to lead to an actionable proposal with certainty of financing at a compelling value,” and that the company will now “return its full focus” to the “Bold New Chapter” strategy, which was initiated by newly appointed CEO Tony Spring in February 2024.
Arkhouse and Brigade’s latest bid, submitted earlier this month, increased the buyout offer to $24.80 per share for all shares they don’t already own, adding up to approximately $6.9 billion. This was only the latest in a series of buyout offers since the partners first began their takeover overture in December 2023. Still, the Macy’s board said it determined that even this higher bid was “non-actionable,” adding that after more than seven months of protracted, sometimes contentious, negotiations, the process was creating a “significant distraction for the management team at a critical point in the execution of the company’s strategy.”
“As the board has consistently demonstrated throughout this process, we are open-minded to exploring all paths to enhancing shareholder value,” said Paul Varga, lead independent director of Macy’s Inc. in a statement. “At this time, after careful review, we have concluded that Arkhouse and Brigade’s proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources and information shared during this process. The board fully supports A Bold New Chapter strategy, and we believe it provides the best opportunity for value creation.”
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That strategy includes the closure of 150 underperforming Macy’s stores, including approximately 50 this year; expansion of the retailer’s new smaller format stores; and the addition of more Bloomingdale’s and Bluemercury stores, both of which are outperforming other company divisions.
“Our team continues to be singularly focused on creating value for our shareholders,” said Spring in a statement. “While it remains 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.”
The Macy’s board said the company is already seeing progress from its efforts and promised to share additional details on the progress of the initiative during the company’s Q2 earnings report next month. Macy’s stock was down nearly 15% in pre-market trading today on the news, a near seven-month low.
