Macy's shares rise premarket after retail chain rejects take private bid

Investing.com -- Shares in Macy’s (NYSE:M) moved higher in premarket U.S. trading on Monday after the department store chain rejected a $5.8 billion take private bid from investing firm Arkhouse and hedge fund Brigade.

In a statement on Sunday, the retailer said it had reviewed the unsolicited offer, but found that Arkhouse and Brigade had not provided sufficient information to address its concerns around their ability to finance the proposed transaction.

"Following careful consideration [...], the Board determined that Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s, Inc. shareholders,” said Macy's Chief Executive Jeff Gennette.

Macy's added that it had asked Jefferies, the financial advisor for the buyout group, for updates around Arkhouse and Brigade's plans to fund the deal earlier this month, but "no additional information" was provided. However, Arkhouse said Jefferies had provided a "highly confident letter" supporting its claim that it had the money necessary to fund the proposal.

Widely recognized as a mainstay of shopping malls, Macy's has been facing heavy pressure from activist investors to explore a sale, as its brick-and-mortar locations struggle to keep up with digital competitors. Arkhouse and Brigade had previously proposed buying the shares of Macy's it does not already own for $21 a share.

Gennette said Macy's remains open to exploring other opportunities.

Last week, media reports said the company is set to reduce headcount and shutter locations in a bid to cut costs and streamline its business. The reports said 2,350 roles -- amounting to 3.5% of its workforce -- will be slashed, while five stores will be shuttered.

Macy's employed 94,570 full- and part-time employees and operated 722 store locations as of January 2023.

The Wall Street Journal, which was the first to report on the plans, said that Macy's is also aiming to further automate its supply chain and outsource some jobs. In a memo to employees cited by the WSJ, the company said the layoffs would happen on Jan. 26.

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