NEW YORK — Macy’s, Inc. announced after months of discussions with Arkhouse Management Co. and Brigade Capital Management, its Board of Directors has unanimously determined to terminate discussions with Arkhouse and Brigade that have failed to lead to a deal and uncertainty about available financing. The Board intends for the management team to return its full focus to enhancing shareholder value through the execution of the Company’s “A Bold New Chapter” strategy.
The Macy’s, Inc. Board and management team have discussed with Arkhouse and Brigade for more than seven months since their initial outreach in December 2023 expressing interest in acquiring the Company.
More specifically, Arkhouse and Brigade submitted highly conditional and unsigned drafts of financing commitment letters, subject to numerous conditions, including, in certain cases, diligence on Arkhouse and Brigade themselves. Notwithstanding the Company’s financial advisors making it clear that “enterprise level” financing commitment papers would be required (as is customary for public transactions in the sector), Arkhouse and Brigade delivered “asset-based” financing commitment papers tied to the valuation of the Company’s owned real estate, and subject to appraisals, credit rating outcomes, and loan-to-value thresholds. Finalizing and funding these commitment letters would require lengthy additional diligence, including independent, third-party appraisals of over 140 of the Company’s individual store and distribution center locations.
Following a careful review of the “check in” letter and related materials in consultation with its independent legal and financial advisors, the Board unanimously determined that the latest Arkhouse and Brigade proposal remains non-actionable and fails to provide compelling value to Macy’s, Inc. shareholders. The Board believes that continuing diligence is not warranted or in the best interests of shareholders given: 1) the significant uncertainty that Arkhouse and Brigade’s financing could or would ultimately be completed given the substantial conditionality in their financing papers; 2) the less than compelling value proposed; and 3) the significant distraction for the management team at a critical point in the execution of the Company’s strategy. Accordingly, the Board has further unanimously determined to terminate discussions with Arkhouse and Brigade and turn its complete focus to enhancing value for shareholders through the Company’s standalone operating plan.
“As the Board has consistently demonstrated throughout this process, we are open-minded to exploring all paths to enhancing shareholder value. At this time, after careful review, we have concluded that Arkhouse and Brigade’s proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources, and information shared during this process. The Board fully supports A Bold New Chapter strategy, and we believe it provides the best opportunity for value creation,” said Paul Varga, lead independent director of Macy’s, Inc.
Tony Spring, chairman and chief executive officer of Macy’s, Inc., added, “Our team continues to be singularly focused on creating value for our shareholders. While it remains early days, we are pleased that our initiatives have gained traction, reinforcing our belief that the Company can return to sustainable, profitable growth, accelerate free cash flow generation and unlock shareholder value. We look forward to keeping all Macy’s, Inc. stakeholders updated on our progress as we continue to implement our plan and meet the evolving needs of our customers.”
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