Why Macy's (M) Stock Is Falling Today
What Happened:
Shares of department store chain Macy’s (NYSE:M) fell 15.3% in the morning session after the company announced the termination of acquisition discussions with Arkhouse Management and Brigade Capital Management.
In March 2024, Arkhouse Management and Brigade Capital submitted a proposal to acquire all outstanding shares of Macy's they don't already own for $24.00 per share in cash. Macy's Board concluded that the proposal lacked "certainty of financing at a compelling value." Moving on, Macy's announced a new strategy dubbed "A Bold New Chapter" strategy. It noted that the strategy involves "strengthening the Macy's brand, accelerating luxury growth and simplifying and modernizing end-to-end operations."
Overall, the announcement implied there is no certainty investors would be able to sell their shares at the previously stated offer price. This uncertainty is driving the decline in the stock's price.
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What is the market telling us:
Macy's's shares are quite volatile and over the last year have had 17 moves greater than 5%. But moves this big are very rare even for Macy's and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock gained 18.5% on the news that the company announced it received a revised offer from Arkhouse Management and Brigade Capital to acquire all outstanding shares for $24.00 per share in cash they don't already own. The new offer is for $24 each, or $6.6 billion, up 14.3% from the $21/share offer announced in December 2023. The new offer represents a 33.3% premium to where Macy's shares closed on March 1, 2024.
Gavriel Kahane and Jonathon Blackwell, Arkhouse Managing Partners, highlighted "frustration with Macy's Board of Directors' delay tactics and refusal to engage with their credible buyer group." These "emphasized the shareholder concern evident in the stock price selloff following recent restructuring plans and a dividend hike announced by Macy's."
Lastly, they reiterated their commitment to executing the transaction by increasing their offer to $24.00 per share in cash, citing "confidence in Macy's long-term prospects as a private company."
Macy's is down 15.9% since the beginning of the year, and at $16.63 per share it is trading 22.8% below its 52-week high of $21.54 from March 2024. Investors who bought $1,000 worth of Macy's's shares 5 years ago would now be looking at an investment worth $754.07.
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