The department store chain Macy’s is reportedly the target of a $5.8bn (£4.6bn) offer that would result in one of the best-known names in US retail disappearing from the stock market.
Two existing investors, Arkhouse Management and Brigade Capital, banded together to offer $21 a share, the Wall Street Journal first reported.
Macy’s department stores are among the most high-profile in the US because of its sponsorship of a parade on Thanksgiving Day that has run since 1924, with giant floats and balloons featuring popular cartoon characters. The Macy’s top outlet in New York’s Herald Square is one of the world’s biggest department stores.
The company also owns Bloomingdale’s, a more expensive department store brand, and the beauty chain Bluemercury. Despite its cultural prominence and its broad geographical reach, with 700 stores when counting those from other brands, Macy’s has struggled to adapt to online retail.
The chain in 2020 announced the closure of 125 stores, along with cutting 2,000 jobs at its headquarters in Cincinnati and offices in San Francisco.
However, the company is still profitable, making $1.2bn in its last financial year. Some workers went on strike last month during the Black Friday sales period, arguing that Macy’s was profiting while they were not paid a livable wage.
The offer from Arkhouse and Brigade represented a 32% premium when it was reportedly made on 1 December.
Macy’s shares have risen in value significantly over the course of the last month, from a low below $11 a share in mid-November to $17.39 when stock markets closed on Friday evening.
The share price rose by a further fifth to $20.85 in pre-market trading on Monday, before the opening of the New York Stock Exchange. However, even a $21-a-share bid would be lower than the $24 level in February, or the peak approaching $35 in 2021 as the global economy recovered from the coronavirus pandemic lockdowns.
The Wall Street Journal hs reported that the investor consortium believes that public markets have undervalued Macy’s and may be willing to increase the offer further. An investment bank has reportedly offered a letter confirming the bidders have the funds to complete the buyout.
The bidders could be interested in Macy’s large property portfolio, which could be sold for a profit.
Macy’s was approached for comment.