Macy's, Inc. (NYSE:M) shares traded on the front foot in Monday’s early premarket dealing, after the department store operator rejected a $5.8 billion private equity (PE) takeover bid.
Arkhouse Management and Brigade Capital Management made the joint approach which proposed to take the department-store chain private.
The PE funds’ offer was pitched at a premium price of $21.00 per share, but in its response, the Macy’s board described the offer as lacking "compelling value".
Moreover, the retailer questioned the bidders’ ability to finance such a transaction.
Macys’ management declined to engage in due diligence and/or non-disclosure arrangements for any further negotiations.
“The Macy’s Inc board of directors and management team have a proven track record of evaluating a broad range of options to enhance shareholder value. Following careful consideration and efforts to gather additional information from Arkhouse and Brigade, the board determined that Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s Inc shareholders,” Macy’s chair and chief executive said in a statement.
“We continue to be open to opportunities that are in the best interests of the company and all of our shareholders.”
Analysis of the emerging story points to the market’s apparent undervaluation of Macy’s real estate assets, with investor attentions instead focussed on its trading performance.
Arkhouse Management is described as "a US-based real estate investment firm", whilst the company itself says it "invests in opportunistic real estate targeting capital growth".
In New York, Macy’s stock was up 42 cents or 2.38% in Monday’s premarket, changing hands at $18.05 per share.