Dec. 11 (UPI) — A group of investors have launched a $5.8 billion buyout offer to take Macy’s private in a deal thought to be aimed at cashing in on some of the prime locations owned by the department store chain.
The $21 a share bid, valuing the company at more than $1 billion above its current market capitalization, is from Arkhouse Management, a New York investment firm specializing in “mispriced” publicly traded real estate assets, and asset manager Brigade Capital Management, according to reports Monday in The Wall Street, The New York Times and on CNBC.
The offer is a 32% premium over Friday’s $17.39 closing price of a stock that has lost a fifth of its value in the past 12 months as Macy’s stores have battled to retain market share being lost to online sales and digital-only rivals.
However, the news saw the stock jump 15% to $20 a share in premarket trade Monday and continue holding its ground after the open on the New York Stock Exchange.
The Guardian reported that an unarmed investment bank had penned a letter confirming the group has sufficient funds to purchase the shares they do not already own and, provided the due diligence warranted it, might be willing to pay even more.
Macy’s real estate portfolio across 600 stores country-wide is worth at least triple its market value, with its flagship one-million-square-foot Herald Square store on 34th Street in Manhattan worth an estimated $3.3 billion alone.
Despite defying Wall Street expectations in its third-quarter results, the retailer’s sales were still down 7% year over year. Most of the better-than-expected performance was contributed by its other brands Bloomingdale’s and Bluemercury.
Efforts to turn the business around — including plans for 30 new store locations at strip malls announced in October — have made no more than a dent as consumers contend with high-interest rates and inflation, making Macy’s the latest takeover target in the segment.
Kohl’s was the target of similar attention in 2022, receiving a number of bids it ultimately rebuffed saying they undervalued the company “in light of its future growth and cash flow generation.”
