Macy's, Inc. (NYSE:M) shares have soared more than 20% Monday after the company received a $5.8 billion buyout offer from private equity firms Arkhouse Management and Brigade Capital Management.
The deal values Macy’s at $21 per share, and its share price has risen accordingly to $21.11.
Analysts at UBS are fairly bearish on Macy’s, with an $11 price target and a Sell rating for the stock. However, the firm argued that the proposal is good for the Softline retail sector as a whole, which includes clothing, footwear, linens, accessories and more.
“We're surprised a real-estate focused investor would be interested in buying M given we haven't believed the [net present value] of M's real estate is worth $21/share, especially given today's high interest rates,” the analysts wrote.
The winners of this deal could end up being Macy’s competitors like Nordstrom, Inc. (NYSE:JWN), TJ Maxx-parent TJX Companies Inc (NYSE:TJX) and Kohl's Corporation (NYSE:KSS) if Arkhouse Management and Brigade Capital Management opt to sell Macy’s real-estate.
“What matters is the investor group sees value in M and/or its real estate. This likely boosts market sentiment around softline stocks,” analysts wrote. “Plus, if the investor group's intent is to create value by selling M's real-estate, it likely means major market share will become available to M's competitors.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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