Retail giant Macy's recently received an offer to buy all its stores for 5.8 billion dollars. A group of investors formed, among others, by Arkhouse Management and Brigade Capital Management, have launched a proposal to acquire all its stores for a price of $21 per share.
According to the Wall Street Journal, the first media outlet to report on the offer, the group of investors launched its proposal on December 1, however, this news did not reach into the public's knowledge until last Sunday afternoon. The intention of this purchase, said the newspaper, is to safeguard the department store chain, which is increasingly suffering the consequences of the rise of the digital market and, therefore, has far fewer visits and profits than expected.
The offer launched by both Arkhouse Management and Brigade Capital is a 32% premium to the price Macy's achieved on the stock market during Wall Street's close last Friday. On that day, its shares stood at $17.39 a share but fall far short of the up to $70 a share the retail giant achieved in 2015.
This indicates that the buyers are genuinely interested in acquiring the retail giant. Morningstar analyst, David Swartz, told Reuters: "The buyout group is undoubtedly interested in Macy's large real estate portfolio, which has attracted activists and potential buyers in the past."
Macy's value
Macy's portfolio includes the retailer's 500 stores nationwide as well as Bloomingdale's, a high-end department store chain with, according to WSJ, "more than 30 locations and several discount and smaller format stores under the two brands." In addition, notes the business outlet, Macy's in 2015 snapped up the Bluemercury beauty and skin care chain, which currently has more than 160 stores in the United States.
This is not the first offer Macy's has received for its stores. As reported by the economic media, in 2017 and in 2021 it also received proposals to take over its property. In 2017, it was the Canadian giant, Hudson's Bay Co., who tried to reach an agreement that ended unsuccessfully. In 2021, Macy's tried to split its e-commerce operations from its physical operations but ultimately decided not to do so.
However, the cultural value of Macy's is far greater than its market value. Thus, both Macy's annual Thanksgiving Day Parade and its impressive holiday window displays are of far greater interest to the investment group than the retail giant can be financially.
