In a potential game-changing move for Macy’s, real estate investor Arkhouse Management and asset manager Brigade Capital Management have presented a substantial $5.8 billion buyout offer to the struggling retail giant, according to a source familiar with the matter who spoke with Yahoo Finance on Sunday. The buyout offer, submitted on December 1, values Macy’s at approximately $21 per share, constituting a 32.4% premium over the closing price on November 30.
Macy’s board, led by seasoned retail executives such as former Home Depot CEO Frank Blake, is currently evaluating the offer. The proposed buyout is seen as a noteworthy development for Macy’s long-suffering shareholders, providing a potential reprieve during the holiday season.
The offer comes at a time when Macy’s faces the challenges of a fluctuating stock price, closing at $17.39 as of the last trading day. Notably, Macy’s stock reached an all-time high of $70.99 on June 15, 2015, underscoring the complexity of the decision facing the board.
An additional factor that Macy’s must weigh is its valuable real estate holdings, a significant aspect of its overall worth. In 2022, investment bank Cowen estimated the value of Macy’s real estate assets to be within the range of $6 billion to $8 billion. The retailer boasts a coveted real estate portfolio, prominently featuring its iconic Herald Square location in New York City. Over the past decade, valuations by various money managers have placed this trophy asset alone at figures ranging from $3 billion to $4 billion.
While the potential buyout offers a lucrative opportunity for shareholders, Macy’s must also consider the potential disruption a buyout process could introduce in 2024. Amidst the ongoing holiday shopping season, Macy’s is set to publish its results in mid to late February. Furthermore, in February 2024, the company is slated to witness a change in leadership, with long-time executive Tony Spring taking over as CEO from the retiring Jeff Gennette.
As the board navigates these critical decisions, the outcome will significantly impact Macy’s trajectory, shaping its future amid a rapidly evolving retail landscape.
