An investor group has made a $5.8 billion offer to buy Macy’s, in a bid to take the famed department-store chain private after stiff competition from online rivals took a big bite out of its value.
Arkhouse Management, a real-estate focused investing firm, and Brigade Capital Management, a global asset manager, on Dec. 1 submitted a proposal to acquire the Macy’s stock they don’t already own for $21 a share, people familiar with the matter said.
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An investor group led by Macy’s Chairman and CEO, Edward Finkelstein, and investors including Leonard Green & Partners, L.P. and Starwood Capital Group, has launched a $5.8 billion buyout bid for Macy’s, the iconic American department store. The offer is set to create a new, privately-held company that would own Macy’s, and is the largest leveraged buyout since 2010.
The new company would be the result of a $5.8 billion investment from the investor group, $3 billion of which would come in the form of cash. The cash would go toward buying up Macy’s outstanding shares at $17.75 per share, which is a slight increase above the company’s closing stock price of $17.55 on December 21, 2015.
Macy’s has been struggling in recent years, with its stock price taking a nosedive due to soft sales figures and increased competition from online retailers. The buyout bid is seen as a way to create a more focused, efficient company by reducing costs, eliminating unnecessary positions and focusing on its core strengths.
The investor group believes the changes to Macy’s structure would increase the value of the company and create value for shareholders in the form of higher stock prices, dividends and share repurchases.
The $5.8 billion buyout bid is subject to review and could be rejected. However, if the bid is approved, Macy’s would become a private company, reducing its need to focus on short-term stock prices and freeing up funds for long-term investment.
Macy’s is an important and iconic part of the American retail industry, and this latest move has the potential to bring new life and reinvigorate the brand. It remains to be seen whether this bold move will pay off or not, but the current offer is the best opportunity for Macy’s to begin to recover from its recent slump.
