Macy’s is in talks with Arkhouse and Brigade Capital over its previously rejected takeover offers. The department store opened its books to Arkhouse in a confidential agreement that allows the parties to share private commercial information, Reuters first reported March 19.

Arkhouse said in a regulatory filing with the Securities and Exchange Commission that it would need that additional information from Macy’s to potentially make a new bid.

This agreement is the latest development after months of back and forth between Macy’s and Arkhouse. In January, Macy’s rejected a takeover offer from Arkhouse that would have taken the retailer private for $5.8 billion, or $21 a share. Then, the investment firm increased its bid to $24 per share, or $6.6 billion, on March 3. On March 14, Reuters reported that Macy’s and Arkhouse were in talks to potentially open the retailer’s books ahead of a higher offer.

Macy’s and Arkhouse did not respond to requests for comments on negotiations. 

Macy’s ranks No. 17 in Digital Commerce 360’s Top 1000 Database. The Top 1000 ranks North America’s leading retailers by online sales. It is also the second-largest Apparel & Accessories retailer in the database.

Macy’s responses to previous Arkhouse takeover offers

The retailer rejected Arkhouse’s initial takeover bid, citing concerns over financing.

“Arkhouse and Brigade have yet to provide any financing details that would enhance the actionability of their proposal despite multiple opportunities to do so, and instead of attempting a constructive dialogue, Arkhouse has chosen to launch a proxy contest,” Macy’s said in February. 

Arkhouse responded with more details about how it would finance the deal. Specifically, investors Fortress and OneIM will help secure financing, the firm said. Those finance sources represent 100% of the capital needed to purchase all the Macy’s shares the firm doesn’t already own, it said.

According to Arkhouse’s most recent SEC filing, Macy’s called the second takeover bid “less than compelling” and said that “the Board is not currently prepared to transact at this price level.” 

Macy’s has reason to be wary of the offer, said Neil Saunders, managing director of retail analysis firm GlobalData.

“In our view, Macy’s management remain skeptical of the bid and do not particularly like the focus on monetizing the chain’s real estate assets,” he said. “However, since the bid price was raised, Macy’s needs to act in the interest of shareholders — and that means due consideration must be given to the offer.”

“We see this as nothing short than a battle for the future of Macy’s,” Saunders added.

Macy’s Q4 results

Macy’s reported results on Feb. 27 for its Q4 and fiscal 2023 ended Feb. 3. In Q4, Macy’s net sales declined 1.7% to $8.12 billion, and full-year sales declined 5.5% to $24.44 billion. 

The retailer also announced a new strategy, “A Bold New Chapter.” Macy’s plans to close 150 “unproductive” locations by the end of 2026 while growing its luxury Bloomingdale’s and Bluemercury locations. The plan also includes reinvestment in the Macy’s name and branding, with changes to assortment and modernized stores. Macy’s said the plan will start paying off in fiscal 2025, with lower capital spending, sales growth and free cash flow returning to pre-pandemic levels.

Arkhouse commented on the quarterly results and new strategic plan in its March 3 takeover offer. 

“While the restructuring plan Macy’s unveiled last week failed to inspire investors, the fourth quarter earnings and year-end results have given us further confidence in the long-term prospects of the Company if redirected as a private company,” the firm said at the time.

Macy’s also faced recent executive leadership changes. Tony Spring took over as CEO on Feb. 4, replacing Jeff Gennette. Gennette will stay on as chair of the board until the 2024 annual meeting, when Spring will replace him in that role as well.

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