Macy's junk bonds that would pay off in the event of a takeover fall after talks end with private-equity suitors
By Ciara Linnane
Two series of bonds have change-of-control language that would require payment at 101 cents on the dollar
Macy's outstanding high-yield bonds were trading mixed on Monday after the company said it has ended takeover talks with two private-equity suitors after they failed to come up with a compelling enough offer and committed financing.
Two series of bonds - the 5.875% notes that mature in 2029 and the 6.125% notes that mature in 2032 - were selling off, as both carry a change-of-control provision that would require payment at 101 cents on the dollar in the event of an acquisition of the company.
The6.9% notes that mature in 2029 but do not carry that language were faring better, as the following charts from data-solutions provider BondCliQ Media Services show.
As yields ticked up, prices fell.
The bonds are rated Ba2 by Moody's Ratings, placing them two notches into high-yield or "junk" status. They are rated BB+ by S&P Global Ratings, which is one notch into high-yield territory, while Fitch has a BBB- rating, which is the final rung of investment grade.
Client flows show net selling on the day, although the 6.125% notes saw better buying at the lower prices.
Macy's has more than $3 billion in outstanding bonds, according to FactSet, with the bulk maturing in 2034.
Macy's stock (M), meanwhile, was down 13% amid disappointment that a bid seems off the table for now.
The company terminated talks with private-equity firms Arkhouse Management Co. and Brigade Capital Management, which first launched a bid for the company last December that they had recently sweetened to $24.80 a share, or $6.9 billion. The stock was last quoted at $16.55.
Macy's board intends the management team to return its full focus to enhancing shareholder value through the execution of the company's "Bold New Chapter" strategy, Macy's said in a statement on Monday.
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 included 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.
-Ciara Linnane
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
07-16-24 0813ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
September Jobs Report Forecasts Show Moderate Hiring Gains
-
Port Strike a Headache for Shippers but a Potential Tailwind for Certain US Transport Stocks
-
13 Charts on Q3′s Roller-Coaster Rally for Stocks and Bonds
-
5 Stocks to Buy Instead of Overpriced US Equities
-
Q4 Stock Market Outlook: Where We See Opportunities for Investors
-
Markets Brief: Non-Farm Payrolls in the Spotlight Again
-
6 Top-Performing Large-Growth Funds
-
What’s the Difference Between the CPI and PCE Indexes?
-
This Cheap Stock Is Still a Buy Even After 50% Rally
-
10 Top-Performing Dividend Stocks of Q3 2024
-
33 Undervalued Stocks
-
Communication Services: Cable’s Broadband Dominance Isn’t as Strong as It Once Was
-
Technology: Strength Continues, With Software Presenting the Best Buying Opportunities
-
Best- and Worst-Performing Stocks of Q3 2024
-
Top Stocks to Own From the Best Fund Managers
-
2 Cheap Stocks Top Managers Have Been Buying