Macy’s shares dropped over 14% on Monday morning after the retailer announced it was ending its partnership with two investment funds that had been attempting a takeover.
The company revealed it was terminating its collaboration with Arkhouse Management and Brigade Capital Management, which had proposed a $5.8 billion buyout in December.
“Our team is focused on creating value for our shareholders,” Macy’s CEO Tony Spring said in a statement. “While it is still in the early stages, we are pleased that our initiatives are gaining traction, reinforcing our belief that the company can return to sustainable, profitable growth, enhance free cash flow, and unlock shareholder value.”
Macy’s began its engagement with the funds in April after they increased their offer to $6.6 billion and gave away two board seats. However, the remaining board members decided the financing for the proposal was not secure and that Arkhouse-Brigade lacked a solid plan for the company’s future.
Macy’s has been working to revitalize its business after years of struggling to adapt to a changing retail landscape, marked by a shift from malls and the rise of Amazon. The company introduced a reorganization strategy called “A Bold New Chapter” a few months after the Arkhouse-Brigade takeover attempt, focusing on streamlining operations by closing stores and targeting higher-end customers.
“The Board unanimously determined that the latest Arkhouse and Brigade proposal is non-actionable and fails to provide compelling value to Macy’s shareholders,” the company stated. “The Board believes that pursuing further diligence is not warranted or in the best interests of shareholders due to: 1) the significant uncertainty around Arkhouse and Brigade’s financing; 2) the less than compelling proposed value; and 3) the substantial distraction for the management team at a critical point in the company’s strategy execution.”