Macy’s Rejects Takeover Offer, Opts for Self-Directed Turnaround Strategy

Macy’s management has decided to end discussions with private investors looking to take over the company and will instead focus on its own turnaround strategy.

The company’s board of directors unanimously voted to cease negotiations with Arkhouse Management and Brigade Capital Management. The decision was made due to doubts about the investors’ ability to finance the acquisition and concerns that the deal would not be in the best interests of shareholders, Macy’s announced on Monday.

The investors had proposed taking Macy’s private and possibly spinning off its real estate assets or separating its online operations from its physical stores. Despite attempts to acquire the company since December, including an offer of $21 per share in January and an increased bid of $24 per share in March, Macy’s has now definitively called off talks.

Macy’s will pursue its own strategy under the leadership of new CEO Tony Spring. This plan involves closing underperforming stores and investing in its luxury brands, Bloomingdale’s and Bluemercury.

In recent decades, private equity funds and hedge funds have targeted struggling or under-performing retailers with the aim of taking them private, improving their operations, and eventually selling them for profit. However, this approach has often resulted in closures rather than revivals, as seen with companies like Sears and Toys “R” Us.

Retail analyst Neil Saunders supported Macy’s decision, stating that the investors’ proposals offered no long-term value and would have weakened the company. “Other than seeking to monetize Macy’s real estate assets for short-term gain, neither party brought any long-term value to the table,” Saunders noted.

Following the announcement, Macy’s stock fell by approximately 13% in morning trading on Wednesday, settling at $16 per share.

Traditional department stores like Macy’s have faced increasing competition from online retailers such as Amazon and big-box stores like Walmart and Target, which offer a wide range of products including groceries. Analysts have also criticized Macy’s for underinvesting and implementing cost-cutting measures that have negatively impacted customer service.