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Arkhouse Management, a real-estate focused investing firm, and
Brigade Capital Management, a global asset manager, submitted a
proposal to acquire the Macy's stock they don't already own for
$21 a share on Dec. 1, the person said. The Wall Street Journal
reported the offer earlier Sunday afternoon.
The offer for the Bloomingdale's parent is a 20.76% premium from
its closing at $17.39 on Friday.
Macy's shares were trading at $20.78, or up nearly 20% before
the bell on Monday. Fellow department store operators Kohl's and
Nordstrom also rose about 4% premarket.
The investor group already has a big 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. It isn't clear how the retailer views the proposal,
the person familiar with the matter said.
Arkhouse and Brigade believe Macy's is undervalued in the public
markets and have indicated a willingness to raise the offer
subject to due diligence, the WSJ report said, adding that an
investment bank has provided a letter supporting the group's
ability to raise the necessary financing to get through the
deal.
Macy's declined to comment, while Arkhouse and Brigade did not
respond to Reuters requests for comment.
The retailer crushed analysts' estimates for quarterly profit on
lower inventories and strong demand for beauty products in
November, signaling that attempts to trim inventory from 2022
highs were finally working ahead of the all-important holiday
shopping season.
Macy's has a market capitalization of about $4.77 billion and
its shares are down nearly 15.79% this year.
It's unclear whether Arkhouse and Brigade have the resources to
execute on a deal of such a size, given that they have not
previously done anything of this magnitude.
A $2.4 billion bid that a group of investors led by Arkhouse
submitted two years ago for real estate investment trust
Columbia Property Trust was unsuccessful. Pimco subsequently
acquired Columbia Property for $3.9 billion.
(Reporting by Abigail Summerville in New York; Additional
reporting by Juby Babu in Bengaluru; Editing by Diane Craft and
Lisa Shumaker)
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