An investor group made up of Arkhouse Management and Brigade Capital has made a $5.8 billion bid to take department store chain Macy's private after intense competition from online rivals significantly reduced its value, a person familiar with the matter said on Sunday .
Arkhouse Management, an investment firm specializing in real estate, and Brigade Capital Management, a global asset manager, submitted a proposal on Dec. 1 to acquire Macy's shares, which they do not already own, for $21 per share, the person said . The Wall Street Journal reported on the offering early Sunday afternoon.
The offer for the Bloomingdale parent company is a 20.76 percent premium over Friday's closing price of $17.39.
The group already has a significant stake in Macy's through funds managed by Arkhouse and discussed the proposal with the department store chain, whose board subsequently met to discuss the offer. It's unclear how the retailer views the proposal, the person familiar with the matter said.
Arkhouse and Brigade believe Macy's is undervalued in the public markets and have indicated it would be willing to increase its offer subject to due diligence, the WSJ report said, adding that an investment bank letter confirming the group's ability to raise the necessary financing to see the deal through.
Macy's, Arkhouse and Brigade did not immediately respond to a Reuters request for comment on the report.
The retailer beat analysts' estimates for quarterly profit due to lower inventory and strong demand for beauty products in November, signaling that attempts to reduce inventory from 2022 highs were finally working ahead of the crucial holiday shopping season.
Macy's has a market capitalization of about $4.77 billion and its shares have fallen nearly 15.79 percent this year.
By Abigail Summerville and Juby Babu
Learn more:
Macy's Rises as Profit Beats Forecasts on Improved Inventories
The results underscore an emerging trend for retailers this quarter, which reported improvements in profitability but struggled to maintain sales growth.
