Macy’s reportedly receives $5.8 billion buyout offer from investor group

Macy’s, Inc. may be going private. 

Arkhouse Management, a real estate-focused  investment firm, and asset management firm Brigade Capital Management have submitted a $5.8 billion bid to acquire the Macy’s stock they don’t already own, reported the Wall Street Journal. The offer is for $21 a share, which represents a 32% premium above the stock’s closing price Friday. 

The investors believe the department store giant is undervalued and have already discussed their offer with Macy’s board, according to the Journal report. The group indicated that it would be willing to raise its offer based on due diligence.

Among Macy’s key assets are its real estate portfolio, which is valued at about $8.5 billion, reported Reuters. The company’s iconic Herald Square property in New York City is worth about $3 billion.

The offer comes at a pivotal time for Macy’s, which has been working to reinvent itself with an increased focus on digital growth and its smaller, off-mall store concept. In October, the retailer said it would open up to 30 small-format stores through fall 2025. The stores are about one-fifth the size of a full-line Macy’s, which average from 180,000 to 200,000 square feet, and are located in off-mall, shopping centers. 

Macy’s turnaround efforts have been done under the leadership of 40-year company veteran Jeff Gennette, who has served as CEO since 2017. He is set to retire in February, succeeded by Bloomingdale’s chief Tony Spring.

In November, Macy’s reported better-than-expected top and bottom line third-quarter results. The company sounded a confident note as its headed into the holiday season and reaffirmed its 2022 guidance for annual sales and raised its earnings outlook.

Macy’s net income fell to $43 million, or $0.15 a share, for the quarter ended Oct. 28, from $108 million, or $0.39 a share, in the year-ago period. Adjusted earnings per share came to $0. 21, way in front of Street  break-even estimates.

Sales fell 7.1% to $4.86 billion, ahead of estimates of $4.78 billion.