Investors Propose to Take Macy’s Private with $5.8 Billion Buyout Bid

Investors have submitted a $5.8 billion buyout bid to take Macy's private.

An investor group composed of real estate investment firm Arkhouse Management and asset manager Brigade Capital have submitted a $5.8 billion bid to buy out Macy’s, Inc. and take the retail conglomerate private, multiple sources report.

Arkhouse already has a large stake in Macy’s and would be paying a premium to own the rest of the company — the offer values the retailer at $21 per share, about 23% over the $17 a share that the stock was trading at as of the close of business Friday. Share prices are up about 16% on the news of the bid in early hours trading today. Arkhouse also has indicated it would be willing to pay even more for the chain subject to due diligence, according to The Wall Street Journal, which first reported the news.

Macy’s has been diligently working on a turnaround for several years now after a long period of slumping sales due in large part to online competition. Efforts have included:

Still, shares of Macy’s, Inc. remain at near-record lows and nowhere near the company’s peak of $69 per share back in 2015. Net sales in Q3 2023 were down 7% compared to the same period in 2022 to $4.9 billion. The Macy’s banner specifically saw 7% declines in both brick-and-mortar and digital sales during the period, and only the Bluemercury division was able to generate a comp sales increase of 2.5%, compared to a 7.6% dip from the Macy’s nameplate and a 3.2% drop from Bloomingdale’s. Earlier in the year, Macy’s cut its full-year outlook despite beating earnings estimates in Q1.

Despite this, Arkhouse believes Macy’s is undervalued, sources familiar with the matter told WSJ, which cited the brand’s outsized cultural significance bolstered by things like its annual Thanksgiving Day parade and famed holiday windows.

Beyond that “the buyout group is undoubtedly interested in Macy’s large real estate portfolio, which has attracted activists and potential buyers in the past,” Morningstar analyst David Swartz told Reuters. J.P. Morgan analysts estimate Macy’s total real estate value at about $8.5 billion, including the company’s iconic Herald Square property, which the brand recently spent $235 million to revitalize and is now valued at approximately $3 billion.