An investor group has submitted a bid for the famed department store chain Macy’s that would take the retailer private at a value of $5.8 billion, according to a person familiar with the bid, more than $1 billion over its current market value.
Arkhouse Management, an investment firm that focuses on what it calls “mispriced” publicly traded real estate assets, and Brigade Capital Management, an asset manager, offered $21 a share for Macy’s on Dec. 1, according to the person, who spoke on condition of anonymity because the offer is still confidential. That price represents a significant premium over Macy’s current share price.
The firms already have a stake in Macy’s, according to the person. While it was not immediately clear how the investor group was planning 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. Among Macy’s valuable real estate holdings is its flagship Herald Square location.
Neil Saunders, the managing director of the retail consulting firm GlobalData, on Sunday cautioned against such deals.
“An investor group that sells off real estate and perhaps takes other actions such as spinning off the e-commerce business, would certainly make some short-term gains,” Mr. Saunders wrote in a statement. “But unless some of those profits were reinvested in revitalizing the core retail business, it would leave Macy’s in the worst of all worlds.”
The takeover bid was reported earlier by The Wall Street Journal.
The offer for Macy’s, the largest department store chain in the United States, comes in the midst of the holiday shopping season, a crucial period that can hugely affect a retailer’s year. The department store has also been preparing for an executive transition. Jeff Gennette, its chief executive since 2017, has announced plans to retire in February. He is to be succeeded by Tony Spring, who currently runs Bloomingdale’s, the company’s upscale store chain.
The bid represents a 32 percent premium on Macy’s closing share price on Friday of $17.39. The retailer’s stock is down roughly 20 percent over the last year, as its 500 nationwide brick-and-mortar stores have struggled to fend off digital retail rivals.
Like its peers, Macy’s has been seeking to cull its lower-performing retail stores and improve its online buying experience. After a pandemic shopping surge, its core customers have pulled back this year as inflation has taken a toll. Higher costs for groceries and other daily expenses have led many consumers to curb their spending on clothing and discretionary items. Macy’s is also hoping to win over a new generation of customers more accustomed to shopping online than heading to large department stores.
Macy’s net sales fell 7 percent last quarter. On a call with analysts, Mr. Spring highlighted the growth of the company’s newer, smaller-scale stores and its e-commerce expansion. “I am confident we can evolve Macy’s Inc. into a more relevant destination,” he said. “The fundamentals are there.”