Macy's Receives $5.8 Billion Buyout Offer
Macy's has received a $5.8 billion offer from an investment group to take the iconic department store chain private, a deal that could have more to do with the retailer's real estate holdings than its actual business.
The bid for the 165-year-old retailer was made on December 1 by Arkhouse Management, a real estate focused investing firm, and Brigade Capital Management, a global asset manager, according to the Wall Street Journal.
The investor group already holds a large stake in Macy's through Arkhouse-managed funds, and offered to pay $21 a share to purchase Macy's stock that it doesn't already own, the newspaper reported.
Macy's stock closed at just above $17 a share on Friday, down about 17% for the year. On Monday, shares were up almost 17% at $20.29 a piece, giving the company a market valuation of nearly $5.6 billion.
Years of chronic underperformance has weighed on Macy's shares, making the company a relatively attractive acquisition target. But its value has more to do with real estate than the company's business, according to retail analyst Neal Saunders.
Macy's Real Estate Portfolio Could Attract Savvy Investors
A potential takeover of Macy's by investment firms Arkhouse and Brigade could be a lucrative opportunity for investors, according to industry expert Saunders. With Macy's real estate portfolio estimated to be worth at least $6 billion, surpassing its current market capitalization, the investment firms could make a generous return by monetizing the real estate alone. Macy's, which operates nearly 500 stores nationwide, has declined to comment on the potential takeover.
Department stores have faced challenges in recent years, with several major retailers declaring bankruptcy. Macy's has been undergoing a turnaround effort led by CEO Jeff Gennette, who will be retiring in February. The potential takeover could have implications for Macy's future, with Saunders suggesting that going private may result in the brand fading further and faster.
Source: Original Article
