Macy's bonds rally with stock after investor group reportedly offers to take company private

By Ciara Linnane

Bonds rally on report of $5.8 billion bid for Macy's

Macy's Inc.'s stock soared 21% Monday on a report that an investor group is seeking to take the department-store chain private at $21 a share, sending the company's bonds higher with the stock.

Arkhouse Management and Brigade Capital Management have submitted a $5.8 billion bid to acquire the Macy's stock (M) they don't already own for $21 a share, a 32% premium over Friday's closing price of $17.39, the Wall Street Journal reported on Sunday, citing people familiar with the matter.

The stock has fallen sharply in recent years. It was trading as high as $70 in 2015 before competition from other, more nimble retailers put pressure on the business, along with some other previous household names.

The investor group has said it believes Macy's is undervalued in public markets and signaled it would be willing to raise the offer subject to due diligence, the paper reported. An unnamed investment bank has provided a letter supporting the group's ability to raise financing for the deal.

Macy's operates nearly 500 namesake stores, as well as 30 Bloomingdale's stores and nearly 160 Bluemercury stores, which offer beauty and skin-care products.

Macy's bonds rallied on Monday, as the following charts from data-solutions provider BondCliQ Media Services illustrate.

This chart shows the company's maturity stack, with bonds that mature out to 2043.

The bonds have seen net selling over the last two weeks.

On Monday, sellers dominated customer flows.

Macy's has been a takeover target in the past, most recently in 2017 when Canada's Hudson's Bay Co. made an approach that failed to gain traction.

The company considered splitting out its e-commerce division in 2021 but decided against it. The company has since been restructuring under Chief Executive Jeff Gennette, who is to retire next year. He will be succeeded by Tony Spring, who is currently head of Bloomingdale's.

In November, the company posted a surprise third-quarter profit and sales that exceeded expectations as margins improved and inventories fell back to "healthy" levels.

For the holiday season, Spring said Macy's customers continue to be "under pressure and discerning" in how they spend in discretionary categories, but he stressed that the company has the flexibility to react to customer demand.

The stock is now in the black for the year with a 2.3% gain, while the S&P 500 SPX has gained 19%.

-Ciara Linnane

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12-11-23 1345ET

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