Macy's Scraps Buyout Talks With Investment Group

Macy’s is scrapping discussions with Arkhouse Management and Brigade Capital Management after months of negotiations.

Originally, in December, the two investment firms submitted a $5.8 billion offer to buy out the retailer, which equaled $21 per share. At the time, that represented a 32 percent premium from the previous day’s closing price.

In March, Macy’s agreed to enter talks about a new proposal when Arkhouse and Brigade upped their bid to $24 per share. The two potential buyers even went up to $24.80 per share afterward  but Macy’s was still not impressed.

In response, the retailer’s lead independent director, Paul Varga, said in a statement today that it “concluded that Arkhouse and Brigade’s proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources, and information shared during this process.”

The buyout bid was widely seen as an opportunity to monetize Macy’s considerable real estate holdings. J.P. Morgan analytics estimated it to be worth $8.5 billion, or $31 per share. Investment bank Cowen saw the value ranging between $6 billion and $8 billion. Meanwhile, Evercore ISI put a $5 billion and $7 billion range on Macy’s. As of midday, the company’s market capitalization sits at more than $4.6 billion.

Regardless, retail analyst Neil Saunders thinks that the talks falling apart will be a blessing in disguise for everyone.

“Other than seeking to monetize Macy’s real estate assets for short term gain, neither party brought any long-term value to the table,” Saunders said in a note to clients Monday, according to CNN.

“Many of the activist investor proposals would have significantly weakened Macy’s and hampered its ability to survive as a retail operation.”

Going forward, Macy’s said it will focus on creating value for its stockholders and achieving profitable growth. One strategy the company is testing out is what it calls “A Bold New Chapter.” There, it will center its attention on growing its luxury segment and providing a modern spark to its end-to-end operations.