Macy’s shares fell by more than 14% in Monday morning trading after the retailer said it was done working with a pair of investment funds that had been trying to take it over.
The company announced that it was cutting short its collaboration with Arkhouse Management and Brigade Capital Management, which had extended a $5.8 billion buyout offer in December.
“Our team continues to be singularly focused on creating value for our shareholders,” Macy’s CEO Tony Spring said in a statement. “While it remains early days, we are pleased that our initiatives have gained traction, reinforcing our belief that the Company can return to sustainable, profitable growth, accelerate free cash flow generation and unlock shareholder value.”
Macy’s began working with the funds in April after they raised their offer to $6.6 billion, even ceding two seats on its board. But the rest of the board decided that the financing behind the offer wasn’t secure enough and that Arkhouse-Brigade didn’t have a good-enough plan to take the company forward.
Macy’s has been trying to turn things around after years of struggling to adapt to a post-mall, post-Amazon retail environment, having unveiled a reorganization strategy called “A Bold New Chapter” a couple months after the Arkhouse-Brigade takeover effort was unveiled. That strategy focused on simplifying operations by closing stores and chasing after higher-end customers.
“The Board unanimously determined that the latest Arkhouse and Brigade proposal remains non-actionable and fails to provide compelling value to Macy’s, Inc. shareholders,” the company said in its announcement. “The Board believes that continuing diligence is not warranted or in the best interests of shareholders given: 1) the significant uncertainty that Arkhouse and Brigade’s financing could or would ultimately be completed given the substantial conditionality in their financing papers; 2) the less than compelling value proposed; and 3) the significant distraction for the management team at a critical point in the execution of the Company’s strategy.”
