Macy’s: Rejection of Takeover Offer Could Be Hasty; Shares Attractive

On Jan. 21, Macy’s and Arkhouse Management put out separate press releases regarding the previously reported offer by Arkhouse and Brigade Capital Management to buy Macy’s for $21 per share in cash (see our Dec. 10 note). In its release, Macy’s called the bid “not actionable” and said that it will not sign a nondisclosure agreement or provide access to due diligence information because the investors’ offer is not compelling and their ability to raise financing is in doubt. However, in its release, Arkhouse claimed confidence in the financing and said that there is “the potential for a meaningful increase to our original proposal” if due diligence is granted. Further, the investors announced that they are prepared to pursue “direct engagement with stockholders.” While this could be interpreted as a threat to go hostile and challenge Macy’s board in a proxy fight, such a move would be costly and difficult, especially as the deadline for nominees for this year’s annual meeting is just a few weeks away.