Activist investor steps up pressure on Macy’s for proposed buyout

New York – The tussle for control of Macy’s Inc. has broken out into the open as the would-be acquirers and Macy’s board issued competing statements yesterday evening.

Real estate fund asset manager Arkhouse Management issued a public statement describing itself and partner Brigade Capital Management as “highly motivated” to take Macy’s Inc. private – and pressuring Macy’s Inc. to engage in discussions immediately.

Early last month, Arkhouse and Brigade offered $5.8 billion to acquire the company. Unless Macy’s responds to that offer this week, the bidding parties are prepared to put the matter directly before the retail conglomerate’s shareholders for a vote, it said yesterday.

In response, Macy’s last night asserted that the existence of a bid offer itself does not require the company to enter into a non-disclosure agreement or provide due diligence information to Arkhouse and Brigade. Macy’s board and its advisors reviewed the proposal, but Arkhouse and Brigade failed to address the board’s concerns about their ability to finance a go-private transaction, the retail said.

Arkhouse asserted that its financial advisor, Jefferies Group, “has provided a highly confident letter supporting our ability to raise the necessary funds for the transaction.”

Macy’s also released the full test of a letter it sent to Arkhouse yesterday.

“As an initial matter, the proposed financing plan remains entirely uncommitted and your ‘highly confident letter’ is subject to numerous non-standard preconditions. Even were it to be less conditional, based upon advice from our advisors, we have significant concerns about the viability of the structure of your financing plan,” the letter stated.

Outgoing Macy’s Inc. CEO Jeff Gennette added in the company’s public statement yesterday that Arkhouse and Brigade’s proposal is not actionable and “fails to provide compelling value to Macy’s, Inc. shareholders.

Since the Wall Street Journal reported Arkhouse/Brigade’s Dec. 1 offer, this is the first time either party as commented publicly on the matter.

Last week, Macy’s Inc. announced it will lay off more than 2,000 employees as of Jan. 26 to reduce expenses and redirect investments to make the company more responsive to customers.

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