News

Macy's (M) ended buyout talks with an investor group led by Arkhouse Management and Brigade Capital, which had proposed acquiring the department store chain for $6.9 billion. Macy's stated that the offer did not provide compelling value and that there were uncertainties regarding its financing. The termination of these discussions caused Macy's shares to plummet by 15% on Monday. The investor group had previously revised their offer to $24.80 per share, valuing Macy's at $6.86 billion, which represented a 43% premium to the stock’s close on Dec. 8 when the bid first emerged.

The decision to halt buyout negotiations comes after months of efforts and the involvement of Arkhouse’s nominees on Macy’s board's finance committee. Macy's had opened its books to the investor group and provided extensive information and time for them to secure financing. However, Macy’s stated there was "no actionable proposal" from the investors after four months of due diligence. Macy's will now focus on its turnaround plan led by new CEO Tony Spring, aiming to boost performance ahead of the holiday season through job cuts and store closures.

Market Overview:

• Macy's shares plummeted by 15%.


• The buyout offer was $24.80 per share.


• Investor group included Arkhouse Management and Brigade Capital.

Key Points:

• Macy's will focus on its turnaround plan.


• The offer did not provide compelling value.


• Job cuts and store closures planned through 2026.

Looking Ahead:

• Opening new Bloomingdale's and Bluemercury stores.


• Focus on luxury brands for growth.


• Peer Nordstrom also a recent takeover target.

Morningstar analyst David Swartz noted that Macy's likely anticipated a higher bid than what was offered. He also mentioned that a hostile takeover would be extremely costly and uncertain in outcome, especially as Macy's shifts focus to its new strategic direction. Macy's had raised its annual profit forecast in May, despite sluggish demand affecting sales. The company plans to open new Bloomingdale's and Bluemercury stores to grow its luxury brand segment.

Peer retailer Nordstrom (JWN) has also recently become a takeover target, indicating a broader trend of acquisition interest in the retail sector. Macy's net sales in 2023 were $23.1 billion, the lowest in nearly two decades, excluding the pandemic year of 2020. The company’s new strategy aims to reverse this trend and drive growth in the coming years.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.