Macy’s: Arkhouse Goes Hostile but May Need to Sweeten Its Offer To Win; Some Upside for Investors

Arkhouse Management and Macy’s have issued separate press releases to disclose that Arkhouse has nominated nine candidates to Macy’s board (annual meeting date undetermined). Arkhouse stated that it was nominating the dissident slate to “preserve our ability to protect the rights of all shareholders.” As discussed in our prior notes on Dec. 11 and Jan. 22, it and partner Brigade Capital offered to acquire Macy’s for $21 per share in December, but this offer was rejected by Macy’s on the grounds that it was too low and that requested information on financing had not been provided. Arkhouse countered that it provided the requested information and that it may be willing to increase its bid after due diligence. It also suggested that it may take its fight directly to shareholders, as it has now done. Arkhouse’s latest release does not explicitly state it, but the result of a successful proxy fight would likely be that it and Brigade would take Macy’s private. The buyout group is probably interested in monetizing Macy’s significant real estate holdings, possibly through one or more sale-leaseback transactions.