Home Private Equity Macy’s Stock Rises After Rejecting Private Equity Buyout. It’s Just the Beginning.

Macy’s Stock Rises After Rejecting Private Equity Buyout. It’s Just the Beginning.

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Macy’s rejected an unsolicited $5.8 billion offer to take the department store chain private on Sunday, prompting the bidders to threaten to go straight to shareholders.

The stock gained 2% in premarket trading Monday to $17.98. Coming into the session, the shares are down 25% over the past 12 months but have surged 56% in the past three months on speculation of a buyout.

On…

Macy’s

rejected an unsolicited $5.8 billion offer to take the department store chain private on Sunday, prompting the bidders to threaten to go straight to shareholders.

The stock gained 2% in premarket trading Monday to $17.98. Coming into the session, the shares are down 25% over the past 12 months but have surged 56% in the past three months on speculation of a buyout.

On Sunday, Macy’s issued a statement confirming that private equity firms Arkhouse and Brigade Capital made an offer to acquire the company for $21 a share on Dec. 1. The board has now rejected the bid, saying it failed to provide compelling value.

Arkhouse issued its own statement saying it may go hostile, bypassing board approval and appealing directly to shareholders.

The offer may have some appeal to shareholders if they are frustrated with Macy’s turnaround efforts. The store, which started as a dry goods story in New York in 1858, is struggling to make itself fit for the 21st Century amid stiff competition online.

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Other department stores such as JCPenney,

Nordstrom
,

and

Kohl’s

have faced similar difficulties. Online retailer

Amazon

has eaten into their market share.

Macy’s last week announced that it had laid off an additional 3.5% of its workforce, equivalent to some 2,350 employees. It’s been reorganizing for years to try to lower costs. CEO Jeff Gennette is due to step down in a few weeks, to be replaced by Tony Spring.

Write to Brian Swint at brian.swint@barrons.com

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