(BFM Bourse) – Although in difficulty, the department store chain declined a $5.8 billion buyout offer from two investment companies. Macy’s has expressed doubts about financing this operation.
In great difficulty, Macy’s nevertheless says no to a takeover. The famous department store chain said it had rejected a $5.8 billion offer from two investment funds, Arkhouse Management and Brigade Capital Management.
Macy’s explains in its press release published Sunday that it “received an unsolicited and non-binding proposal from Arkhouse Management and Brigade Capital Management to acquire all of the outstanding shares of the company for $21 per share in cash, on December 1 2023.”
Macy’s has therefore confirmed information from the Wall Street Journal which revealed last December that it was the subject of a buyout offer for a total of $5.8 billion, or $21 per share. The offer therefore represented a premium of approximately 21% compared to the closing price on Friday, December 8.
“Serious reservations” about financing
This press release is accompanied by a letter addressed to Arkhouse and Brigade Capital Management in which the director of Macy’s, Jeff Gennette, rejects the request. He justifies his decision with “serious reservations” as to the capacity of these two funds to finance this proposal. [de rachat] non-binding. “We have serious concerns about the viability of the structure of your financing plan,” explains the brand’s boss.
Macy’s therefore wants a serious candidate for a possible takeover. The company indeed expects that a potential buyer “demonstrates sufficient financial commitment and is used to carrying out buyouts in the retail sector, explained for their part two sources close to the matter told Reuters.
On Wall Street, Macy’s shares rose 2.7% to $18 around 3:40 p.m., after the rejection of the joint offer from Arkhouse Management and Brigade Capital Management. Remember that the stock of the store chain took off by 19.50% on December 11 in reaction to this press information revealing these signs of interest for the store chain in difficulty.
It must be said that this is not the first time that Macy’s has aroused the appetite of many predators. In 2017, the Canadian company Hudson Bay Co unsuccessfully approached the company to buy it. Macy’s then studied a potential split of its e-commerce activities but without going through with it, the Wall Street Journal explained in December.
A distributor in decline
But these difficulties have greatly increased over the years. Like many retailers, the department store chain is suffering from high inflation weighing on household spending and competition from online brands. Last week, Macy’s announced a 3.5% reduction in its workforce, a measure which will be accompanied by the closure of five stores.
“As we prepare to roll out a new strategy to meet the needs of an ever-changing consumer and marketplace, we have made the difficult decision to reduce our workforce by 3.5% in order to become a more lean company “, the company said in a statement.
In the third quarter of 2023, Macy’s observed a 7% decline in its sales in value, both in physical stores and online. Its earnings per share were more than halved to 21 cents. The brand also explained that it suffered from low visibility, citing an “uncertain macroeconomic climate” and “pressures caused among consumers”.
Sabrina Sadgui – ©2024 BFM Bourse