(USNewsBreak.com) – Macy’s, around since 1858, is one of those household names in America. What started as a small dry goods shop expanded over the years into a department store where people shop for the latest fashions and home goods. Lately, however, competition with online rivals has caused the chain to struggle. While it didn’t suffer the same fate as JCPenney and Neiman Marcus during the 2020 health emergency, the retail outlet still needs to increase sales. The iconic department store chain also recently turned down a takeover bid.
In December, The Wall Street Journal broke the story that Arkhouse Management and Brigade Capital submitted an unsolicited proposal to Macy’s, saying they would buy up the remaining stock they didn’t own for $21 per share. At the time, that equated to a 32% premium and totaled $5.8 billion as an offering. After discussing the offer, the retailer decided to decline it. The investor group led by Arkhouse and Brigade currently holds a significant stake in the retail chain.
On Sunday, January 21, the company issued a news release stating that the companies failed to provide additional information on a funding plan, and board members deemed the offer not viable because it showed a “lack of compelling value.” In a letter to the management companies, the CEO, Jeff Gennette, notified them that the Macy’s “Board continues to have serious reservations” about their “ability to finance [the] non-binding proposal.” Gennette noted that the proposal contained many “non-standard preconditions” that gave the company pause, and as such, they would not be providing more information as requested.
GlobalData Managing Director Neil Saunders said the board likely viewed the Arkhouse deal for its “real-estate focused approach,” which is “wrong for the business.” While the company is open to receiving offers, though it’s not soliciting them, it expects that those that do come through have experience in the retail sector — Arkhouse and Brigade do not — and the bidder should have enough committed financing to ensure the deal will not fall through at the last minute.
The board also seemed to believe the bid undervalued the retailer, as it owns nearly 45% of its store locations, giving its real estate a value of $7.5 to $11.6 billion.
As the retailer faces pressure to increase sales, it’s letting go of approximately 3.5% of its workforce. That equates to around 2,350 employees. Additionally, the chain is closing five stores in a bid to cut costs and streamline operations to remain competitive in a continually changing landscape.
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