Arkhouse Management and confederate Brigade Capital Management have upped the ante in their bid to takeover Macy’s, bringing the proposal to purchase outstanding share of Macy’s for $24 each.
After assessing an earlier $21-a-share Arkhouse/Brigade proposal, Macy’s declared that its board had determined that the proposition lacked compelling value. Under the circumstances, the retailer noted that it wouldn’t enter into a non-disclosure agreement or provide any due diligence information to Arkhouse and Brigade. Macy’s added that the proposal included non-standard preconditions. Further, Macy’s indicated that the company and its financial advisors had significant concerns about the viability of the financing plan structure.
The investment firms asserted that their latest offer represents a 51.3% premium to Macy’s unaffected share price on November 30, 2023, the day before Arkhouse and Brigade submitted their original proposal on December 1 of last year, as well as a 33.3% premium to where the company’s shares closed on March 1, 2024. It also represented an increase of 14.3% from the Arkhouse and Brigade original offer of $21 per share submitted on December 1.
In making the new proposal, Gavriel Kahane and Jonathon Blackwell, Arkhouse managing partners, stated:
We remain frustrated by the delay tactics adopted by Macy’s board of directors and its continued refusal to engage with our credible buyer group. Nonetheless, we are steadfast in our commitment to execute this transaction. In recent months, Macy’s has introduced two restructurings and a dividend hike. The stock price selloff following these announcements is a strong indication of shareholder concern about maintaining the status quo. We continue to offer the company an attractive alternative solution through a sale of the company at a substantial premium. This would provide Macy’s stockholders with significant value and immediate liquidity.
While the restructuring plan Macy’s unveiled last week failed to inspire investors, the fourth quarter earnings and year-end results have given us further confidence in the long-term prospects of the company if redirected as a private company. After coordinating with our financing sources, we have increased our offer to $24 per share in cash. We remain open to increasing the purchase price further subject to the customary due diligence.
Kahane went on to characterize the idea, which Macy’s has raised, that the Arkhouse/Brigade plan isn’t practically actional as untrue.
“We clarified the 50% equity contribution we laid out three months ago and disclosed our partnership with two highly regarded investors, Fortress and OneIM,” he said. “With the help of our advisors, we have identified large global institutional financing sources for each debt component of the transaction with a strong interest in finalizing commitments during a customary diligence process. These sources represent 100% of the capital required to buy the shares in Macy’s we do not already own at our proposed price of $24. per share in cash.”
Kahane went on to dismiss objections Macy’s has raised to its buyout, adding that it hoped the company board would carefully consider the new $24 per share proposal.
