Arkhouse and Brigade Failed to Provide Evidence
of a Viable Financing Plan and Unsolicited Proposal Lacks
Compelling Value
Macy’s, Inc. Board Remains Open to
Opportunities to Create Shareholder Value and Will Continue to Act
in the Best Interest of All Shareholders
Macy’s, Inc. (NYSE: M) confirmed today that it received an
unsolicited, non-binding proposal from Arkhouse Management Co. LP
(“Arkhouse”) and Brigade Capital Management, LP (“Brigade”) to
acquire all of the outstanding shares of the Company for $21.00 per
share in cash on December 1, 2023, and that the Macy’s, Inc. Board
of Directors (the “Board”) has determined that the non-binding
proposal does not constitute a basis to enter into a non-disclosure
agreement or provide any due diligence information to Arkhouse and
Brigade.
The Macy’s, Inc. Board of Directors and management team are
committed to driving long-term value and are open-minded about the
best path to achieve this objective, regularly reviewing the
Company’s structure, strategies and internal and external
value-creation levers. Upon receipt of the unsolicited, non-binding
proposal from Arkhouse and Brigade, consistent with its fiduciary
duties, the Macy’s, Inc. Board conducted a careful review of the
proposal in consultation with its independent legal, financial and
real estate advisors.
Arkhouse and Brigade provided certain additional requested
information relating to its financing plan, which the Board
reviewed with the assistance of the Board’s advisors, but such
additional information failed to address the Board’s concerns
regarding Arkhouse and Brigade’s ability to finance their proposed
transaction. Contrary to assertions by Arkhouse, Macy’s, Inc.’s
financial advisors never stated there were no further questions
regarding the financing plan for Arkhouse and Brigade’s proposal.
As recently as January 15, 2024, Macy’s, Inc.’s financial advisors
asked Jefferies, Arkhouse and Brigade’s financial advisor, whether
there were any updates on the financing plan available to share
with the Macy’s, Inc. Board, and no additional information was
provided.
In light of the Board’s concerns, as well as the lack of
compelling value in their non-binding proposal, the Board has
determined not to enter into a non-disclosure agreement or provide
any due diligence information to Arkhouse and Brigade.
“The Macy’s, Inc. Board of Directors and management team have a
proven track record of evaluating a broad range of options to
enhance shareholder value. Following careful consideration and
efforts to gather additional information from Arkhouse and Brigade,
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 Jeff Gennette, Chairman and Chief
Executive Officer of Macy’s, Inc. “We continue to be open to
opportunities that are in the best interests of the Company and all
of our shareholders.”
The full text of the letter sent by the Macy’s, Inc. Board to
Arkhouse and Brigade is below:
January 21, 2024
Mr. Gavriel Kahane & Mr. Jonathon Blackwell Arkhouse
Management Co. LP
Mr. Matthew Perkal Brigade Capital Management, LP
Dear Gavriel, Jonathon and Matthew,
I have conveyed to the Macy’s,
Inc. Board of Directors the discussions we have had with respect to
your December 1, 2023 non-binding proposal to acquire the Company,
as well as the related discussions between the Company’s financial
advisors and your financial advisor, Jefferies. Over the
intervening period, the Board, with the assistance of its legal,
financial and real estate advisors, has carefully reviewed the
terms of your non-binding proposal, the accompanying letter from
Jefferies and the additional information relating to your financing
plan as relayed through Jefferies.
After consultation with our
advisors, the Board continues to have serious reservations about
your ability to finance your non-binding proposal. 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. For
example, the Board has been advised that your proposed cash equity
contribution of only 25% of the required capital is well below
current market levels for similar transactions, and consequently,
your proposed overall leverage is well in excess of what could
likely be achieved in today’s marketplace and sustainable for a
company in our sector. Based upon advice the Board has received, we
believe that this quantum of indebtedness, as well as your reliance
on a large amount of payment-in-kind securities, make it highly
unlikely that your proposed financing structure could be
successfully executed.
Given our concerns, which have not
been addressed since my December 14, 2023 letter, as well as the
lack of compelling value in your non-binding proposal, the Board
does not see a basis to enter into a non-disclosure agreement or
provide any due diligence information in response to your proposal.
Such an exercise would unnecessarily distract our management team
as it continues to drive value for shareholders through execution
of our business strategy and value creation levers.
Should you have anything new to
share, we continue to be open to opportunities that are in the best
interests of Macy’s, Inc. and all of our shareholders.
On behalf of the Board of
Directors,
Jeff Gennette
Chairman and Chief Executive
Officer
Bank of America Securities and Wells Fargo are acting as
financial advisors and Wachtell, Lipton, Rosen & Katz is acting
as legal advisor to the Company.
About Macy’s, Inc.
At Macy’s, Inc. (NYSE: M), we are a trusted source for quality
brands at great values from off-price to luxury. Across our iconic
nameplates, including Macy’s, Bloomingdale’s and Bluemercury, we
help our customers express their unique style and celebrate special
moments, big and small. Headquartered in New York City, we operate
one of retail’s largest e-commerce businesses integrated with a
nationwide footprint to deliver the most convenient and seamless
shopping experience. Our purpose is to create a brighter future
with bold representation – so we can realize the full potential of
every one of us. For more information, visit macysinc.com.
Forward-Looking Statements
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of
Macy’s management and are subject to significant risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by the forward-looking statements contained
in this release because of a variety of factors, including Macy’s
ability to successfully execute against its five growth vectors,
including the ability to realize the anticipated benefits
associated with the strategy, conditions to, or changes in the
timing of proposed real estate and other transactions, prevailing
interest rates and non-recurring charges, the effect of potential
changes to trade policies, store closings, competitive pressures
from specialty stores, general merchandise stores, off-price and
discount stores, manufacturers’ outlets, the Internet and catalogs
and general consumer spending levels, including the impact of the
availability and level of consumer debt, possible systems failures
and/or security breaches, the potential for the incurrence of
charges in connection with the impairment of intangible assets,
including goodwill, declines in credit card revenues, Macy’s
reliance on foreign sources of production, including risks related
to the disruption of imports by labor disputes, regional or global
health pandemics, and regional political and economic conditions,
the effect of weather, inflation, inventory shortage, labor
shortages, the amount and timing of future dividends and share
repurchases, our ability to execute on our strategies and achieve
expectations related to environmental, social, and governance
matters, and other factors identified in documents filed by the
company with the Securities and Exchange Commission, including
under the captions “Forward-Looking Statements” and “Risk Factors”
in the company’s Annual Report on Form 10-K for the year ended
January 28, 2023. Macy’s disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240121296252/en/
Media – Chris Grams communications@macys.com
Investors – Pamela Quintiliano investors@macys.com
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