According to the Wall Street Journal, an investor group consisting of Arkhouse Management and Brigade Capital has made a $5.8 billion offer to take Macy’s private.
Other news sources confirmed the bid.
Arkhouse Management, a real-estate-focused investment firm, and Brigade Capital Management, a global asset manager, offered $21 a share for Macy’s on December 1. The offer represents a 20.8 percent premium from Macy’s closing at $17.39 on Friday. Macy’s shares were trading at $20.63, or up nearly 19 percent before the bell on Monday.
The investor group already has a stake in Macy’s through Arkhouse-managed funds and has discussed the proposal with the department store chain, whose Board subsequently met to discuss the offer.
While it was not immediately clear how the investor group planned to finance the rest of the deal, department stores have been a frequent target of takeover attempts over the past several years by investors looking to take advantage of prime real estate.
J.P. Morgan analysts estimated Macy’s total real estate value at about $8.5 billion, or $31 per share, including the iconic Herald Square property worth about $3 billion.
Arkhouse and Brigade believe Macy’s, the largest department store chain in the United States, is undervalued in the public markets and indicated a willingness to raise the offer subject to due diligence, the WSJ report said, adding that an investment bank had provided a letter supporting the group’s ability to raise the necessary financing to get through the deal.
Macy’s has a market capitalization of about $4.77 billion, and its shares are down nearly 15.8 percent this year. Macy’s sales have declined over the past year as the legacy retailer struggles to keep up with online competitors.
