Macy’s: Reported Buyout Offer Is Worth Considering

On Dec. 10, The Wall Street Journal reported that Macy’s had received a buyout offer of $21 per share (equity value of just under $6 billion) from Arkhouse Management and Brigade Capital Management. While this offer is below our unchanged $25 per share fair value estimate, it is a premium to recent midteens share prices. Moreover, the report states that Brigade, a hedge fund with a history of investments in retail, and Arkhouse, a real estate investor, may be willing to raise their bid after due diligence. Given this possibility and Macy’s significant liabilities (including $3 billion in long-term debt), combined with our view that the firm does not have a competitive advantage, should be enough to allow this acquisition process to move forward. Our opinion is supported by the poor performance of the shares of fellow no-moat department store Kohl’s since its acquisition process collapsed in early 2022.