Macy’s Inc. Receives Sweetened Takeover Bid

Macy’s Inc.’s shares climbed 15.4% on Monday, following an increased takeover bid from investor group Arkhouse Management and Brigade Capital. The new bid now stands at $24 a share or approximately $6.6 billion, up from the previous offer of $21 a share or about $5.8 billion. The Macy’s board had initially rejected the earlier bid in January, citing a lack of compelling value.

Strong Trading Volume and Premium Offer

By early afternoon, trading volume surged to 12.1 million shares, surpassing the average daily volume of 10.4 million shares over the past 65 days. The new offer represents a 51.3% premium to Macy’s share price as of November 30, 2023, and a 33% premium to the stock price as of Friday’s close at $18.01 a share.

Investor Frustration and Commitment

Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell expressed their frustration with Macy’s board’s delay tactics and lack of engagement with their buyer group. Despite this, they remain committed to seeing the transaction through.

Bond Market Reaction

The company’s bonds also rallied on Monday, with yields ranging between 6.50% and 6.75%. Net buying activity was observed throughout the day, indicating investor interest in the bonds.

Debt Details and Company Response

According to FactSet, Macy’s holds approximately $3.2 billion in debt, with a significant portion maturing in 2034. The company confirmed receipt of the latest offer and stated that it would review it in accordance with its fiduciary duties.

Restructuring Plan and Earnings Performance

Last week, Macy’s unveiled a restructuring plan that involves closing 150 stores, including its flagship location in downtown San Francisco. Additionally, the company reported fourth-quarter earnings that exceeded expectations.

Despite a 8% decline in stock value over the past year, compared to a 27% gain by the S&P 500 index, Macy’s remains in the spotlight due to the ongoing takeover bid and restructuring efforts.

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