Macy’s have found investors to buyout its department store chain. An investor group consisting of Arkhouse Management and Brigade Capital has made a $5.8 billion offer to take department store chain Macy’s (M.N) private, according to a person familiar with the matter on Sunday.
Arkhouse Management, a real-estate focused investing firm, and Brigade Capital Management, a global asset manager, submitted a proposal to buyout the Macy’s stock they don’t already own for $21 a share on Dec 1, the person said.
Investors wanting to buyout Macy’s
The offer to buyout Macy’s the Bloomingdale’s parent is at a 20.76% premium from its closing share price at $17.39 on Friday.
The group of investors already has a big stake in Macy’s through Arkhouse-managed funds. The investors have discussed the proposal with Macy’s, 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.
Macy’s valuation
Macy’s valuation as per Arkhouse and Brigade is much less in short undervalued in the public markets and have indicated a willingness to raise the offer subject to due diligence. The report also stated an investment bank has provided a letter supporting the investor group’s ability to raise the necessary financing to get through the Macy’s buyout deal.
Macy’s declined to comment, while Arkhouse and Brigade did not respond.
Macy’s 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 or valuation of about $4.77 billion. Macy’s shares are down nearly 15.79% this year.
Macy’s investors resources
It’s unclear whether the Macy’s investors 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.
