US Markets
Monday, December 11th, 2023 2:58 pm EDT
Key Points
- Acquisition Offer for Macy’s: Arkhouse Management and Brigade Capital Management have proposed acquiring Macy’s for $5.8 billion, indicating a valuation of $21 per share. This offer represents a premium over Macy’s closing share price of just over $17 on Friday, which had experienced a 17% decline since the beginning of the year. In premarket trading on Monday, Macy’s shares saw a 15% increase.
- Potential for Higher Bid and Macy’s Struggles: Arkhouse, specializing in real estate investment, and Brigade Capital, an asset management firm, are open to offering a higher bid after conducting due diligence. Macy’s has faced challenges in keeping up with online competitors, prompting the company to make efforts to attract customers back to its brick-and-mortar stores. Despite these endeavors, Macy’s sales declined by 7% year-over-year in the third quarter.
- Retail Industry Challenges and Online Shopping Resilience: Macy’s has become an acquisition target amid declining sales and competition from both online retailers and brands opting to sell directly to consumers rather than through department stores. The broader retail industry has encountered difficulties in 2022 due to volatile interest rates and high inflation affecting consumer spending. While online shopping has shown resilience, the strength of the holiday season remains uncertain, with several retailers issuing cautious fourth-quarter outlooks. The acquisition bid for Macy’s follows a similar pattern to Kohl’s, which faced takeover offers in 2022, claiming undervaluation. Both Arkhouse and Macy’s declined to comment, and Brigade Capital had not responded to CNBC’s request for comment at the time of reporting. The Wall Street Journal initially reported the buyout offer.
Arkhouse Management and Brigade Capital Management have presented a buyout offer for Macy’s at $5.8 billion, valuing the retailer at $21 per share. Macy’s shares closed just above $17 on Friday, reflecting a 17% decline since the beginning of the year. However, in premarket trading on Monday, the shares surged by 15%. Arkhouse, known for real estate investment, and Brigade Capital, an asset management firm, expressed readiness to consider a higher bid after conducting due diligence.
Macy’s, a department store struggling to compete with online retailers, has implemented various strategies to lure customers back to its brick-and-mortar locations. In October, the company announced plans for 30 new store locations in strip malls, signaling a shift away from traditional shopping malls. Despite these efforts, Macy’s sales have faced challenges, declining by 7% year-over-year in the third quarter.
The retailer’s recent optimism, following a quarter that exceeded Wall Street expectations, was driven largely by the performance of brands it owns, such as Bloomingdale’s and Bluemercury, rather than its namesake Macy’s chain. Macy’s has become an acquisition target amid declining sales and increasing competition, not only from online competitors but also from brands choosing to sell directly to consumers rather than through department stores.
The acquisition bid comes at a time when retailers, in general, are grappling with challenges like volatile interest rates and high inflation, impacting consumer spending. While online shopping has shown resilience, the overall strength of the holiday season remains uncertain after several retailers issued cautious fourth-quarter outlooks. This acquisition bid follows a similar pattern to Kohl’s, which faced takeover offers in 2022, claiming undervaluation.
Arkhouse and Macy’s declined to comment on the matter, and Brigade Capital did not immediately respond to CNBC’s request for comment. The Wall Street Journal initially reported the buyout offer. The development highlights the ongoing turbulence in the retail sector and the strategic moves being made by companies to navigate a rapidly evolving market.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/11/macys-receives-5point8-billion-buyout-offer-sources-say.html
