Macy's stock tumbles after takeover talks with Arkhouse and Brigade were ended

By Ciara Linnane

Stock sinks more than 12%, heads for 7-month low

Macy's Inc.'s stock tumbled 15% early Monday, after the department-store chain said it terminated talks with private-equity firms Arkhouse Management Co. LP and Brigade Capital Management LP after failing to reach a compelling deal with committed financing.

The two firms have been seeking to acquire Macy's (M) since last December and had twice sweetened the offer to a most recent bid of $24.80 a share, or $6.9 billion.

In April, Macy's ended a proxy fight with Arkhouse with an agreement to place two of its nominees to the board as independent directors.

"The board intends for the management team to return its full focus to enhancing shareholder value through the execution of the company's "A Bold New Chapter" strategy," Macy's said in a statement on Monday.

The stock dropped 12.2% toward a seven-month low in premarket trading.

The Arkhouse/Brigade bid came at a time when Macy's was restructuring its business in an effort to boost growth and profitability.

In February, the company announced plans to close 150 stores and book a $1 billion charge. Macy's said the plan also includes monetizing up to $750 million worth of assets.

The goal of the plan was to revitalize its sales assortment, modernize its shopping experience and bolster its position in the luxury market, where the company's Bloomingdale's and Bluemercury stores have been outperformers.

The company said after seven months of talks and due diligence, it was unable to find a path forward for the deal and that it had told the firms the $24.80 bid was not sufficiently compelling.

The firms were also unable to provide committed financing, creating uncertainty for its shareholders.

"As the Board has consistently demonstrated throughout this process, we are open-minded to exploring all paths to enhancing shareholder value," independent director Paul Varga said in prepared remarks. "At this time, after careful review, we have concluded that Arkhouse and Brigade's proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources, and information shared during this process."

The stock has fallen 19.8% in the year to date, while the S&P 500 has gained 17.7%.

-Ciara Linnane

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07-15-24 0941ET

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