Macy’s, Inc. confirmed on the evening of January 21 that it had received an unsolicited, non-binding proposal from Arkhouse Management Co. LP and Brigade Capital Management, LP to acquire all of the remaining shares—not already owned by the investment groups—for $21.00 per share in cash on December 1, 2023, and that Macy’s, Inc.’s Board of Directors determined that the non-binding proposal does not constitute a basis to enter into a non-disclosure agreement or provide due diligence information to Arkhouse and Brigade.

Macy’s shares closed on January 19 at $17.48 per share after a negative week due partly to proposed layoffs and a store closure plan.

The investors making the bid said early on January 21 that they were ready to go directly to shareholders, which could entail launching a battle for board seats or a hostile takeover bid, according to The Wall Street Journal

The Journal described the Arkhouse’s stake in Macy’s as “sizable.” It also inferred that the rejection of the buy-out offer on the evening of January 21 was in response to its earlier reporting that day of the potential threat by the investors to go to the other shareholders.

Macy’s said in a press release that its Board of Directors and management team are committed to driving long-term value and are open-minded about the best path to achieve its objective, regularly reviewing the retailer’s structure, strategies, and internal and external value-creation levers. 

Upon receipt of the unsolicited, non-binding proposal from Arkhouse and Brigade, consistent with its fiduciary duties, the Macy’s, Inc. Board said it carefully reviewed the proposal in consultation with its independent legal, financial and real estate advisors.

The retailer stated that Arkhouse and Brigade provided certain additional requested information relating to its financing plan, which the Board reviewed with the assistance of its advisors. However, such other information failed to address the Board’s concerns regarding Arkhouse and Brigade’s ability to finance their proposed transaction. 

Contrary to assertions by Arkhouse, the retailer said its financial advisors never stated there were no further questions regarding the financing plan for Arkhouse and Brigade’s proposal. 

As recently as January 15, 2024, Macy’s, Inc.’s financial advisors reportedly asked Jefferies, financial advisor for Arkhouse and Brigade, whether any updates on the financing plan were available to share with the Macy’s, Inc. Board, and no additional information was provided.

In light of the Board’s concerns and the lack of compelling value in its non-binding proposal, the Board said it determined not to enter into a non-disclosure agreement or provide due diligence information to Arkhouse and Brigade.

“The Macy’s, Inc. Board of Directors and management team have a proven track record of evaluating a broad range of options to enhance shareholder value. Following careful consideration and efforts to gather additional information from Arkhouse and Brigade, the Board determined that Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s, Inc. shareholders,” said Jeff Gennette, chairman and CEO, Macy’s, Inc. “We continue to be open to opportunities that are in the best interests of the company and all of our shareholders.”

Bank of America Securities and Wells Fargo are financial advisors, and Wachtell, Lipton, Rosen, and Katz are legal advisors to Macy’s, Inc. 

The full text of the letter sent by the Macy’s, Inc. Board to Arkhouse and Brigade is below.


January 21, 2024


Mr. Gavriel Kahane & Mr. Jonathon Blackwell
Arkhouse Management Co. LP

Mr. Matthew Perkal
Brigade Capital Management, LP

Dear Gavriel, Jonathon and Matthew,

I have conveyed to the Macy’s, Inc. Board of Directors the discussions we have had with respect to your December 1, 2023 non-binding proposal to acquire the Company, as well as the related discussions between the Company’s financial advisors and your financial advisor, Jefferies. Over the intervening period, the Board, with the assistance of its legal, financial and real estate advisors, has carefully reviewed the terms of your non-binding proposal, the accompanying letter from Jefferies and the additional information relating to your financing plan as relayed through Jefferies.

After consultation with our advisors, the Board continues to have serious reservations about your ability to finance your non-binding proposal. As an initial matter, the proposed financing plan remains entirely uncommitted and your “highly confident letter” is subject to numerous non-standard preconditions. Even were it to be less conditional, based upon advice from our advisors, we have significant concerns about the viability of the structure of your financing plan. For example, the Board has been advised that your proposed cash equity contribution of only 25% of the required capital is well below current market levels for similar transactions, and consequently, your proposed overall leverage is well in excess of what could likely be achieved in today’s marketplace and sustainable for a company in our sector. Based upon advice the Board has received, we believe that this quantum of indebtedness, as well as your reliance on a large amount of payment-in-kind securities, make it highly unlikely that your proposed financing structure could be successfully executed.

Given our concerns, which have not been addressed since my December 14, 2023 letter, as well as the lack of compelling value in your non-binding proposal, the Board does not see a basis to enter into a non-disclosure agreement or provide any due diligence information in response to your proposal. Such an exercise would unnecessarily distract our management team as it continues to drive value for shareholders through execution of our business strategy and value creation levers.

Should you have anything new to share, we continue to be open to opportunities that are in the best interests of Macy’s, Inc. and all of our shareholders.

On behalf of the Board of Directors,
Jeff Gennette
Chairman and Chief Executive Officer

Image courtesy Macy’s