A nasty spat between premier US retailer Macy’s Inc. and some of its shareholders got a little hotter last month, when Arkhouse Management, with partner Brigade Capital, compiled a list of nine nominees with the hope of grabbing a majority of the 14 seats on Macy’s board of directors. The nominees include top brass at rival chains including Hudson’s Bay, Target, and Victoria’s Secret.
This is Arkhouse’s plan B. The New York-based private equity firm, which claims to have a 4.4% “economic exposure” to Macy’s, originally pitched a take-private deal that valued the retailer at $6 billion, or $21 per share. Macy’s rebuffed the bid, arguing that Arkhouse was too opaque in explaining its planned financing—specifically, whether it had committed capital lined up or not.
“Rather than make any attempt to provide additional information,” Macy’s said in a statement, “Arkhouse instead sent a letter to our board on Sunday, February 11, 2024, requesting we extend our director nomination window.” Macy’s determined that the proposal “lacked compelling value.”
Arkhouse clapped back, blaming the current Macy’s board for a “history of poor performance.”
Macy’s stock is about 75% cheaper than it was roughly a decade ago. The 166-year-old company is expected to lay off 2,000 employees and close at least 150 stories by 2026.
Still, financial analysts say the storied company’s real estate portfolio alone is worth billions more than what Arkhouse and Brigade offered. Macy’s owns more than 58% of its 722 store locations, including its flagship in Midtown Manhattan, touted as the world’s largest department store from 1924 to 2009. The company also owns Bloomingdale’s, which it acquired in 1949, as well as the Bluemercury beauty brand, which it purchased for $210 million in 2015. Macy’s is expected to present its own preferred board candidates in a proxy filing some time before a yet-to-be-scheduled shareholder meeting. Bank of America Securities and Wells Fargo are advising Macy’s on M&A prospects; Wachtell, Lipton, Rosen & Katz is overseeing legal matters. Jefferies is advising Arkhouse.
