Macy’s department store chain has turned down an unsolicited offer of $5.8 billion to take the company private. The rejection has led the bidders, private-equity firms Arkhouse and Brigade Capital, to consider bypassing the Macy’s board and appealing directly to shareholders.
Market Response
Despite the rejection, Macy’s stock rose by 1.9% in premarket trading on Monday, reaching $17.96. Over the past year, however, shares have fallen by 25%. Speculation regarding a potential buyout has caused the stock to surge by 56% in the past three months.
The Offer and Board Response
On December 1st, Arkhouse and Brigade Capital made an offer of $21 per share to acquire Macy’s. However, the board deemed the bid as lacking compelling value, leading to its rejection. In response, Arkhouse threatened to go hostile and appeal directly to shareholders.
Shareholder Appeal
The offer from the private-equity firms may find some appeal among frustrated shareholders who are dissatisfied with Macy’s current turnaround efforts. The iconic department store, which originated in New York in 1858 as a dry goods store, is facing significant challenges in adapting to the digital age and fierce online competition.
Company Restructuring
Macy’s recently announced that it would be laying off an additional 2,350 employees, equating to a 3.5% reduction in its workforce. The company has been undergoing restructuring for several years in an effort to cut costs. CEO Jeff Gennette will be stepping down shortly and will be replaced by Tony Spring.