Macy’s Inc. is closer to opening up to Arkhouse Management and Brigade Capital Management, which want to take the chain private and have been trying to get a closer look at the company’s books to potentially sweeten their offer.
Arkhouse and Brigade offered to buy Macy’s for $21 a share in December and later upped the offer to $24 a share, but were rebuffed each time.
Macy’s said the price was too low and that the financing behind the deal was not certain enough to even allow the investors in to conduct due diligence that might help them get more comfortable with a higher price.
While the back and forth blossomed into a proxy fight that has the suitors proposing new directors for Macy’s board, there has been some movement behind the scenes.
On Thursday, Arkhouse filed its preliminary proxy statement with regulators, detailing how their proposed deal came together and revealing the two sides are now in negotiations to sign a confidentiality agreement.
Brigade’s Matthew Perkal and Philip Shannon had a sit-down with Macy’s chairman Jeff Gennette and the company’s new chief executive officer, Tony Spring, on March 5.
The filing said: “Mr. Perkal also provided Messrs. Gennette and Spring with an opportunity to view copies of the commitment letters/proposals from certain equity and debt financing sources secured by Arkhouse Management and Brigade in furtherance of the Acquisition Proposal, which copies were subsequently provided to the company’s advisors.”
That seems to have helped jar the situation loose and Macy’s told the investors on March 11 that the offer price was “less than compelling,” but that the company was willing to negotiate a confidentiality agreement to let the investors take a closer look at Macy’s.
Wall Street approved and sent shares of Macy’s up 3.4 percent to $21.49 in midday trading.
Neil Saunders, managing director of GlobalData, said: “In our view, Macy’s management remain skeptical of the bid and do not particularly like the focus on monetizing the chain’s real estate assets. However, since the bid price was raised Macy’s needs to act in the interest of shareholders — and that means due consideration must be given to the offer.
“Macy’s is right to be skeptical of Arkhouse and Brigade’s intentions,” Saunders said. “Given the expertise of the groups and their various statements about Macy’s, it is very clear that the heart of their plans involves selling off real estate to generate a return.”
