Macy's Soars 21% Following $5.8 Billion Buyout Offer

Arkhouse Management and Brigade Capital Management have made a substantial bid to acquire Macy's, driving the company's shares up by a remarkable 21%, reliable sources revealed to CNBC on Sunday.

This offer values the iconic retailer at an impressive $21 per share, far surpassing its most recent closing price of just over $17 per share on Friday, reflecting a decline of approximately 17% since the start of the year. Notably, Macy's shares closed nearly 20% higher on Monday in response to the buyout offer.

Sources indicate that Arkhouse, known for its focus on real estate investments, and Brigade Capital, an esteemed asset management firm, are open to enhancing their bid after conducting thorough due diligence. However, it is noteworthy that the group is already presenting a premium offer for the embattled department store, which has faced ongoing challenges in keeping pace with its online competitors.

In an attempt to revitalize its brick-and-mortar business, Macy's has implemented various strategies. For instance, in October, the company announced plans to open 30 new store locations specifically situated in strip malls as part of a strategic transition away from traditional shopping centers.

Despite these efforts, Macy's sales witnessed a decline of 7% year over year in the third quarter. Nonetheless, the retailer expressed optimism following a better-than-expected performance in its most recent quarter, largely driven by strong sales from its owned brands, including Bloomingdale's and Bluemercury, rather than its flagship Macy's chain.

Given the challenging environment of diminishing sales and intensifying competition, both from online startups and brands favoring direct-to-consumer sales, Macy's has emerged as an alluring acquisition target. This situation mirrors that of Kohl's in 2022, which faced multiple acquisition offers that the company believed undervalued its business.

Retailers across the industry have encountered various obstacles this year, with fluctuating interest rates and heightened inflation placing strain on consumer wallets. Nevertheless, the online shopping sector has demonstrated remarkable resilience, as evidenced by robust consumer spending during Black Friday and Cyber Monday. As the holiday season approaches, the strength of consumer spending remains uncertain, with several retailers adopting a cautious outlook for the fourth quarter.