An investment group at the beginning of December submitted a $5.8 billion bid to take legacy department store chain Macy's private, the Wall Street Journal reported late Sunday. M stock rocketed more than 19% Monday.
Real estate focused investor Arkhouse Management and alternative asset manager Brigade Capital Management submitted a proposal on Dec. 1 to acquire the outstanding stock of Macy's that they don't already own for $21 per share, the WSJ reported, citing people familiar with the matter.
The two firms already have a large position in Macy's through Arkhouse-managed funds, according to the WSJ. Macy's board met to discuss the proposal but it is unclear how the vaunted department store brand views the offer, the close sources say. Meanwhile, the investment group believes M stock is currently undervalued in public markets and indicated it may be willing to raise its offer following necessary due diligence.
The initial proposal represented a 32.4% premium to the Nov. 30 closing price of 15.86 the day before the offer.
For fiscal 2022, Macy's reported adjusted earnings of $4.48 per share on $24.44 billion in sales. The legacy retailer reported six consecutive quarterly earnings declines through its Q2 results in August. For 2023, FactSet expects the retailing giant to report adjusted earnings of $3.01 per share on $23.06 billion in revenue.
M Stock Performance
Macy's shares rallied 19.5% Monday following the reports. Kohl's leapt 7%. Nordstrom popped 7.3%.
M stock has been consolidating since February. A four-week rally hoisted shares 58% through Friday, putting it comfortably back above support at its 40-week moving average.
Shares ticked up 0.6% in 2023 through Monday's close.
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