Macy’s takeover bidder promises shareholders a fat payday while an alternative suitor emerges

NEW YORK – Responding to Macy’s rejection of its $5.8 billion takeover bid, a managing partner of Arkhouse Management told CNBC it is pressing ahead with the proposal. “We’re certainly not done,” said Gavriel Kahan said during an interview on the business network yesterday.

The proposed go-private deal with Arkhouse and Brigade Capital Management promises Macy’s Inc. shareholders “a big, premium ‘bird in the hand’ today” as opposed to giving Macy’s management “the opportunity to try to find us ‘two in the bush’ in the coming years,” he contended.

Macy’s Inc.’s real estate is currently worth less than the $21 billion cited by Starboard Value during its 2015 attempt to convince the retail conglomerate to sell off its properties, Kahan told CNBC.

“But there’s a lot” of value, he added. “And shareholders should be able to benefit from that underappreciated, under-utilized, un-harvested real estate value by being taken out at a premium so that we can improve the business behind the scenes as a private company so that it can live on for another century and a half.”

As to what the business plan for Macy’s looks like, Kahan encouraged the CNBC hosts to invite Brigade onto the show to discuss the matter.

Macy’s Inc. issued its first public statement about the unsolicited proposal on Jan. 21, saying the Arkhouse/Brigade proposal lacked “compelling value,” adding that the board of directors and its advisors have serious reservations about the bidders’ ability to finance a deal.

Kahan told CNBC that the financing has progressed as far as it can based on publicly available information about the company. The bidders have been pressing Macy’s Inc. to open the books for due diligence, a request Macy’s has rejected.

“At this stage, based on public information, there isn’t a bank in the world that would give you committed financing, and that’s just par for the course,” Kahan said.

If Macy’s continues to rebuff the offer, Arkhouse and Brigade are prepared to put the offer directly to shareholders, he said.

In the meantime, there appears to be another suitor in the mix. The New York Post is reporting that private equity behemoth Sycamore Partners is making its own play to acquire Macy’s Inc. Sycamore – whose retail properties include Belk department stores, Ann Taylor and Talbots – has been in “quiet talks” with Macy’s for several weeks, unnamed sources told the Post.

For thousands of Macy’s Inc. employees, time has already run out. Today is the official termination date for 2,350 positions at the company. The lay-offs encompass 3.5% of the retailer’s total workforce and roughly 13% of corporate staff.

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