Macy’s shares dropped over 14% on Monday morning after the retailer announced it was ending its collaboration with two investment funds attempting to take it over.
The company stated it was halting its partnership with Arkhouse Management and Brigade Capital Management, which had proposed a $5.8 billion buyout in December.
“Our team continues to be singularly focused on creating value for our shareholders,” said Macy’s CEO Tony Spring. “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.”
Macy’s began collaborating with the funds in April after they increased their offer to $6.6 billion, even granting them two seats on its board. However, the rest of the board concluded that the financing behind the offer was not secure and that Arkhouse-Brigade lacked a solid plan for the company’s future.
Macy’s has been working on turning things around after struggling for years in the shifting retail landscape, unveiling a reorganization strategy called “A Bold New Chapter” months after the Arkhouse-Brigade takeover attempt. The strategy focuses on simplifying operations by closing stores and targeting higher-end customers.
“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 company said in its announcement. “The Board believes 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.”