(CTN News) – Arkhouse Management and Brigade Capital Management have made an offer to acquire Macy’s for $5.8 billion, according to sources familiar with the matter.
The offer values the retailer at $21 per share, which is higher than its closing price of just over $17 a share on Friday. Macy’s shares have been struggling this year, down approximately 17% since the beginning of the year.
However, there has been a 15% increase in the company’s shares during premarket trading on Monday. Arkhouse and Brigade Capital are willing to offer a higher bid after conducting due diligence. Macy’s has been facing challenges in keeping up with online competitors and has made efforts to attract customers back to its physical stores.
Despite these efforts, the retailer’s sales have declined by 7% in the third quarter compared to the previous year.
However, Macy’s expressed optimism after its most recent quarter beat Wall Street’s expectations, with the improvement primarily driven by sales at its owned brands such as Bloomingdale’s and Bluemercury, rather than the Macy’s chain itself.
Macy’s is currently being targeted for acquisition due to its declining sales and competition from both online startups and brands that prefer direct-to-consumer sales rather than selling through department stores.
Similarly, Kohl’s faced a takeover bid in 2022 and received multiple acquisition offers that it believed undervalued its business.
This year, retailers in general have encountered challenges due to fluctuating interest rates and high inflation, which have impacted consumers’ spending power. However, the online shopping sector has shown remarkable resilience in terms of consumer spending.
While online sales were strong during Black Friday and Cyber Monday, it remains uncertain how successful the holiday season will be, as several retailers have expressed cautious outlooks for the fourth quarter.
Both Arkhouse and Macy’s have chosen not to comment on the matter, The initial report of the buyout offer was first published by The Wall Street Journal.