Proactive Investors - Eminent US department store Macy’s, Inc has reportedly received a $5.8 billion (£4.6 billion) buyout offer from private equity firms Arkhouse Management and Brigade Capital Management, according to the Wall Street Journal.
The unconfirmed $21-per-share offer represents a 21% premium to Macy’s Friday closing price, suggesting the private investors believe the chain is undervalued by the public markets.
According to insiders, Arkhouse could increase the offer following a due diligence round.
Reports of the buyout offer led to a surge in Macy's (NYSE:M) stock, which rose as much as 22% to $21.15 in pre-market trading on Monday before falling back to $19.6.
It comes in the wake of Macy's reporting a smaller-than-expected sales drop and improved margins in November.
Despite facing a 7% same-store sales decline in the third quarter, the company managed to beat profit expectations, indicating resilience in a challenging retail environment.
Macy's is widely known for its flagship department stores and the Bloomingdale's chain.
The company has been a staple in American culture, famed for its annual Thanksgiving Day Parade in New York City.
The timing of the buyout offer is particularly noteworthy as Macy's prepares for a leadership transition.
Jeff Gennette, who has spearheaded Macy's through significant strategic shifts, including store closures and a focus on digital offerings, is set to retire in February, passing the reins to Bloomingdale's chief executive Tony Spring.
Macy’s operates 507 stores across the US at the latest count. However, a private equity buyout could lead to the new owners seeking value by stripping underperforming assets and pivoting to a more profitable business model.
Proactive has asked Macy’s to confirm or deny the buyout reports.