Macy’s department store receives $5.8 billion buyout offer: WSJ

Macy’s department store [Photo by Yoon Won-sup]

Macy’s, the iconic department store in the United States that boasts a history of 165 years, has received an acquisition proposal from an investor group.

According to The Wall Street Journal (WSJ) on Sunday, local time, Arkhouse Management, a real-estate focused investing firm, and Brigade Capital Management, a global asset manager, offered to buy Macy’s for $5.8 billion on December 1. The duo are already known to hold a significant stake in Macy’s through their private equity funds.

The proposal values Macy’s at $21 per share, with a premium attached to its closing price of $17.39 on November 30. However, this is only about half of its peak value of $70 in 2015, which indicates that Macy’s value has dropped significantly over the past 8 years.

Macy’s held a meeting to review the acquisition proposal, but has not confirmed its position on the terms of the sale.

Founded in 1858, Macy’s was the world’s largest department store and a representative outlet in the United States until 2009.

It currently operates around 500 stores across the U.S. and also has 30 locations where its luxury department store brand Bloomingdale‘s is in operation.

In 2015, Macy’s acquired beauty and skincare chain Bluemercury, which now has about 160 stores.

Macy’s, however, has faced significant challenges in recent years due to the rise of e-commerce platforms such as Amazon.com. Sales declined from $28 billion in 2014 to $24.4 billion in 2022. The stock has also dropped by about 14 percent this year, and third-quarter sales fell 7 percent from the same period a year ago.

The WSJ analyzed that Macy’s business status has greatly diminished due to declining department store sales, leaving only its “cultural symbolism.” Since 1924, Macy’s has annually hosted the Thanksgiving Day Parade in Manhattan, New York.

This is not the first time Macy’s has received an acquisition proposal.

In 2017, Hudson’s Bay Company, the parent company of luxury department store chain Saks Fifth Avenue, sought a buyout, but the deal fell through.

In 2021, Macy’s considered selling off its e-commerce business division amidst financial difficulties due to the pandemic, but the deal did not materialize. Earlier, activist investors had focused on Macy’s real estate assets and proposed actions such as divestiture.

There have been acquisition proposals for other department stores struggling in the face of stiff competition from online rivals.

Kohl’s, the largest U.S. department store chain, engaged in negotiations with 25 potential buyers in 2022 for the sale, but eventually abandoned the sale.