Raising the stakes: Would-be Macy’s acquirers hike bid by 14%

NEW YORK – Heading into a proxy fight over the future of Macy’s Inc., the firms that hope to take the company private have sweetened their offer.

On Sunday, Arkhouse Management Co. and Brigade Capital Management raised their unsolicited bid for the company to $24.00 per share, or $6.6 billion. That’s nearly 14% than the original $5.8 billion they offered last December.

“We remain frustrated by the delay tactics adopted by Macy’s board of directors and its continued refusal to engage with our credible buyer group. Nonetheless, we are steadfast in our commitment to execute this transaction,” Arkhouse principals Gavriel Kahane and Jonathon Blackwell said yesterday in the announcement about the new bid price for Macy’s Inc.

Macy’s rejected the first offer, saying it expressing skepticism about the financing for such a deal.

Arkhouse and Brigade parried yesterday, revealing that Fortress Investment Group and One Investment Management US as contributors to the 50% equity component of the proposed transaction. The bidders said they also provided additional information to Macy’s about the buyer group’s financing.

“With the help of our advisors, we have identified large global institutional financing sources for each debt component of the transaction with strong interest in finalizing commitments during a customary diligence process. These sources represent 100% of the capital required to buy the shares in Macy’s we do not already own at our proposed price of $24.00 per share in cash,” Kahane and Blackwell stated.

Macy’s restructuring plan inadequate

The bidders also weighed in on Macy’s new strategy to cut costs and shutter 150 stores to re-invest in growth.

The restructuring plan unveiled last week failed to inspire investors, the buying group said. The retailer’s Q4 and full-year results only underscored their belief that the company should be taken private.

“We remain ready to proceed expeditiously with our due diligence toward a mutually agreeable transaction to acquire Macy’s at a substantial premium in cash,” they added.

Macy’s Inc. responded to news of the updated offer with a brief statement:

“The Macy’s Inc. board will carefully review and evaluate the latest proposal consistent with the board’s fiduciary duties and in consultation with its financial and legal advisors. The Macy’s Inc. board has a proven track record of evaluating a broad range of options to create shareholder value, is open-minded about the best path to achieve this objective and is committed to continuing to take actions that it believes are in the best interests of the company and all Macy’s Inc. shareholders.”

Arkhouse has proposed its own slate of nominees to populate the company’s board. Stockholders will cast their votes in the proxy fight at the annual stockholders meeting on May 17.

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