- $5.8 billion buyout offer received
- Values department store at $21 a share
- Macy’s sales down 7% in Q3
Shares in Macy’s (M:NYSE) surged 20% higher to $21 on Wall Street on Monday as investors digested reports stating the department store operator has received a $5.8 billion (£4.6 billion) takeover offer from two existing investors which could take the storied US retailer off the stock market.
Rival department stores Nordstrom (JWN:NYSE) and Kohl’s (KSS:NYSE) were boosted by reports of the potential take-private deal for the owner of Bloomingdale’s and Macy’s, with shares in both names rising around 7% to $17.5 and $26.4 respectively.
Founded 165 years ago and famed for hosting New York City’s Thanksgiving Day parade, Macy’s sales have plunged over the past year with the retailer struggling to keep pace with online competitors.
The retailer has also suffered as brands elect to cut out departments stores and sell their wares direct-to-consumer instead.
COMPELLING PROPERTY PLAY?
As first reported by The Wall Street Journal, real estate investment focused-Arkhouse Management and global asset manager Brigade Capital have offered to buy Macy’s for $5.8 billion.
Analysts believe the buyout group is most likely interested in Macy’s large property portfolio which has previously attracted attention from activists and potential buyers.
The offer values one of America’s most famous retailers at $21 per share, a near-21% premium to Friday’s $17.4 closing price but well below the all-time high of almost $70 reached in 2015 or the $35 reached in 2021 as the global economy recovered from pandemic lockdowns.
According to The Wall Street Journal, Arkhouse and Brigade have indicated their willingness to raise the offer subject to due diligence.
SALES ON THE SLIDE
In recent years Macy’s has attempted a turnaround, shuttering brick and mortar stores and undertaking initiatives to lure shoppers back to its remaining retail outlets.
On 16 November 2023, the department stores group put up third quarter results that beat Wall Street expectations, although sales of $5 billion were still down 7% year-on-year with brick and mortar and online sales both 7% lower.
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‘We delivered better-than-expected top and bottom line third quarter results and are entering the holiday period in a healthy inventory position,’ insisted chairman and CEO Jeff Gennette.
‘Our portfolio of nameplates are leading gift-giving destinations across the value spectrum offering exclusive products. We have refined our gift assortment, simplified our promotions and improved our shopping experience.’
