Department stores have been a frequent target of takeover attempts by investors looking to take advantage of prime real estate.
An investor group has submitted a bid for the famed department store chain Macy’s that would take the retailer private at a value of $5.8 billion, according to a person familiar with the bid, more than $1 billion over its current market value.
Arkhouse Management, an investment firm that focuses on what it calls “mispriced” publicly traded real estate assets, and Brigade Capital Management, an asset manager, offered $21 a share for Macy’s on Dec. 1, according to the person, who spoke on condition of anonymity because the offer is still confidential. That price represents a significant premium over Macy’s current share price.
The firms already have a stake in Macy’s, according to the person. While it was not immediately clear how the investor group was planning to finance the rest of the deal, department stores have been a frequent target of takeover attempts over the past several years by investors looking to take advantage of prime real estate. Among Macy’s valuable real estate holdings is its flagship Herald Square location.
Neil Saunders, the managing director of the retail consulting firm GlobalData, on Sunday cautioned against such deals.
“An investor group that sells off real estate and perhaps takes other actions such as spinning off the e-commerce business, would certainly make some short-term gains,” Mr. Saunders wrote in a statement. “But unless some of those profits were reinvested in revitalizing the core retail business, it would leave Macy’s in the worst of all worlds.”
The takeover bid was reported earlier by The Wall Street Journal.