Macy’s Might Be Bought Out for $5.8 Billion

Investors of the iconic American retailer, Macy’s, have been gifted a seasonal surprise: Macy’s has received a major buyout proposition. Arkhouse Management, a renowned real estate investor, and Brigade Capital Management, a proficient asset manager, put forth a substantial $5.8 billion offer, according to a source familiar with the matter.

With a proposal submission date of Dec. 1, the offer aims to secure Macy’s at roughly $21 per share. Macy’s board of directors — a commendable group of retail industry veterans, including former Home Depot CEO, Frank Blake — are currently deliberating over this unexpected offer. With a 32.4% premium on Macy’s closing price as of Nov. 30, the proposed buyout price has garnered attention. The retail giant’s shares experienced a positive surge, rising by 16% to $20.23 in early Monday trading following the announcement.

The company’s board faces a challenging decision. The proposed value per share is significantly lower than Macy’s all-time high stock price of $70.99 recorded on June 15, 2015. In contrast, the shares were exchanged at $17.39 at close last Friday, as per Yahoo Finance data.

Moreover, the evaluation of the company’s real estate assets cannot be overlooked. Back in 2022, investment bank Cowen evaluated Macy’s real estate holdings to be worth between $6 billion and $8 billion. The prized real estate portfolio, which is spotlighted by the emblematic Herald Square location in New York City, has been valued between $3 billion and $4 billion over the past decade by various money managers.

In addition to evaluating the financial implications of this proposed buyout, Macy’s must consider the potential disruptions to its operations. Amid the holiday shopping frenzy, a buyout process could introduce possible turmoil. Furthermore, the company’s leadership will undergo a transition in February 2024 when Tony Spring is set to replace the retiring CEO, Jeff Gennette.

All in all, the unexpected $5.8 billion buyout offer presents a complex conundrum to Macy’s. The decision on whether to accept the offer or not will undoubtedly be a critical milestone in the company’s storied history.