Activist Investors Sweeten Offer to Buy Macy’s, Shares Soar

Key Takeaways

• Activist investor Arkhouse Management and Brigade Capital Management have raised their offer to buy Macy’s to $24.80 per share.
• The new bid is up from the initial offer of $21 in December and $24 made in March.
• Shares of Macy’s surged roughly 11% in intraday trading Friday on the news.

Shares of Macy’s (M) soared in intraday trading Friday on indications activist investor Arkhouse Management and partner Brigade Capital Management have again sweetened their offer for the biggest U.S. department store chain. The Wall Street Journal reported Wednesday evening that the firms raised their bid for Macy’s by about $300 million to $6.9 billion. The $24.80 per share for the stock Arkhouse and Brigade don’t already own would be a 38.3% premium to Macy’s closing price Wednesday.

This Would Mark Duo’s Third Offer for Macy’s Since December

The two companies initially presented Macy’s with a $21-per-share deal in December, which the board rejected. That led Arkhouse and Brigade to launch a proxy fight that ended when Macy’s approved two board members backed by the investors, after Arkhouse and Brigade came back in March with a $24-per-share bid.

When reached by Investopedia, a representative for Arkhouse declined to comment. Investopedia has also reached out to Macy’s for reaction.

The news sent shares of Macy’s surging roughly 11% to $19.88 as of 11:30 a.m. ET Friday. They are down about 1% for 2024.

What Does This Mean for Macy’s?

With activist investors continuing to push for a higher bid to acquire Macy’s, the future of the department store chain remains uncertain. The repeated sweetening of the offer indicates that Arkhouse Management and Brigade Capital Management are determined to acquire Macy’s at a price they believe is fair.

For Macy’s, accepting the offer could mean significant changes in the company’s management and operations. Activist investors often seek to implement changes that they believe will increase shareholder value, which could involve restructuring, cost-cutting measures, or other strategic initiatives.

Impact on Shareholders

The increase in the offer price has led to a surge in Macy’s stock price, indicating that shareholders are optimistic about the potential acquisition. A higher offer price would mean a significant premium for shareholders who choose to sell their shares as part of the deal.

However, some shareholders may be hesitant to accept the offer, as they may believe that Macy’s has the potential to deliver greater value in the long term if it remains independent. The decision whether to accept the offer or hold onto their shares will ultimately depend on each shareholder’s assessment of Macy’s future prospects.

Final Thoughts

The ongoing saga of Arkhouse Management and Brigade Capital Management’s attempts to acquire Macy’s highlights the complex dynamics of activist investing in the retail sector. As the bidding war continues, it remains to be seen whether Macy’s will ultimately be acquired or if the company will remain independent.

Regardless of the outcome, the increased offer price and the positive market reaction indicate that investors are closely watching the developments surrounding Macy’s. The final decision will have significant implications for Macy’s shareholders and the future direction of the company.

Overall, the latest developments underscore the importance of shareholder activism in shaping the corporate landscape and driving strategic changes in companies like Macy’s.

Read the original article on Investopedia.