The activist investor group that is seeking to buy Macy’s increased the pressure on the department store chain on Sunday, raising its offer and disclosing additional details about its financing plans.
Arkhouse Management and Brigade Capital Management said in a news release that they were now offering $24 per share, valuing the retailer at $6.6 billion. The new offer is up from the $21 a share they last put forward and a 33.3 percent premium to Macy’s closing share price of at $18.01 on Friday.
Arkhouse and Brigade named additional investors they had brought on as equity partners, Fortress Investment Group and One Investment Management. Arkhouse and Brigade also said, in an apparent response to Macy’s questions about its financing, that they had “identified large global institutional financing sources” that “represent 100 percent of the capital required to buy the shares in Macy’s we do not already own.”
The retailer has been facing pressure from these activist investors since December, when the group submitted a bid that would take Macy’s private at a value of $5.8 billion. Arkhouse and Brigade said that unless the retailer began sharing nonpublic information with them, they might take their offer to shareholders. The investors have since nominated nine people to Macy’s board.
Macy’s on Sunday said it would “carefully review and evaluate” the activist investors’ latest proposal.
“The Macy’s Inc. board has a proven track record of evaluating a broad range of options to create shareholder value, is open-minded about the best path to achieve this objective and is committed to continuing to take actions that it believes are in the best interests of the company and all Macy’s Inc. shareholders,” the company said in a statement.
The retailer has been trying to stay focused on its own strategy for turning around the business.
Last week, Macy’s announced a strategy that would vastly change the makeup of the company. It said it would close 150 of its namesake stores over the course of three years, while also opening more locations of Bloomingdale’s and Bluemercury, its upscale chains.
“I hope we get to close on the company before they start these store closures,” Gavriel Kahane, a managing partner at Arkhouse, said in an interview.
Matt Perkal, partner and head of special situations at Brigade, said the “proposal presents the best path forward for Macy’s shareholders by allowing them to benefit from the significant unrealized value of the company.”
As a department store, Macy’s has struggled to win over customers who are increasingly shopping in an e-commerce world as enclosed malls shutter. Macy’s has recorded falling sales for the past few quarters.
Its new chief executive, Tony Spring, who spent his four-decade career at Bloomingdale’s, has acknowledged that the shopping experience at Macy’s isn’t a pleasant one. Shoppers often encounter messy stores with poorly displayed clothes and have difficulty finding staff. The retailer said that it planned to have 350 remaining locations by the end of 2026 and that the capital gained from its closings would flow to the remaining stores.
Mr. Kahane said that if the company were taken private, the investors would focus on turning around the department store business, a feat that he argued would be easier if the retailer were a private company. He also pushed back against analyst speculation that he wanted the retailer only for its real estate.
“So we’re clearly here for the real estate right,” Mr. Kahane said. “We are here because we think they have a lot of real estate on balance sheet, and that real estate is valuable because it has a great tenant in it.”
He played down speculation from some retail analysts that the investors were simply hoping for another buyer to jump in front of them.
“I will feel so much worse if someone comes in and beats us here,” Mr. Kahane said. “I’d also be much more surprised.”
