Macy’s shares plummeted by over 14% on Monday morning after the retailer announced the termination of its collaboration with two investment funds that had attempted to take over the company.
The decision follows the conclusion of Macy’s partnership with Arkhouse Management and Brigade Capital Management, which had proposed a $5.8 billion buyout offer in December.
“Our team remains focused on creating value for our shareholders,” Macy’s CEO Tony Spring stated. “While it is still early, we are encouraged by the progress of our initiatives, reaffirming our belief that the company can achieve sustainable, profitable growth, boost free cash flow generation, and unlock shareholder value.”
Macy’s initially engaged with the funds in April after they raised their offer to $6.6 billion and conceded two board seats. However, the board ultimately deemed the financing behind the offer inadequate and found Arkhouse-Brigade’s future plans for the company insufficient.
Macy’s has been struggling to navigate a retail landscape increasingly dominated by online shopping and the decline of traditional malls. In response, Macy’s introduced a reorganization strategy called “A Bold New Chapter” following 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 remains non-actionable and fails to provide compelling value to Macy’s, Inc. shareholders,” the company’s announcement stated. “The Board believes that continuing diligence is not warranted or in the best interests of shareholders given: 1) the significant uncertainty surrounding Arkhouse and Brigade’s financing; 2) the less than compelling value proposed; and 3) the significant distraction for the management team during a critical phase of the company’s strategy execution.”