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Retail turnaround or a sale for parts?

Macy's falls deeper into takeover battle


Happy Monday. Here’s what we’ve got today…

  • A look at Arkhouse and Brigade’s pursuit of Macy’s

  • The deal sheet, plus this year’s themes to watch for software investors


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Arkhouse Management and Brigade Capital Management have improved their takeover offer for the struggling department store chain Macy’s. At a valuation of $6.6 billion, or $24 per share, the new proposal is a 14 percent increase from the group’s previous offer and a 33 percent premium to Friday’s closing share price.

As part of the new bid, Arkhouse and Brigade have named Fortress Investment Group and One Investment Management as additional equity partners. The group declined to disclose specifics on planned debt financing, though did say they had “identified large global institutional financing sources for each debt component” to round out a package which will “represent 100 percent of the capital required.”

Pushing back on criticism from Macy’s board over an ability to secure full funding, the group said it expects lenders will finalize their commitments following further diligence. ”We have struggled to understand what reservations the Board might have at this point and urge the Company to engage with us in good faith with the goal of reaching a transaction that would unlock significant value for all stockholders,” Arkhouse adds.

Macy’s Responds

Arkhouse and Brigade first approached Macy’s in December with an unsolicited $5.8 billion offer. At the time, the group threatened to take its offer to shareholders if the company didn’t engage.

In January, Macy’s formally rejected the proposal. Late last month, the Arkhouse-led group set the stage for a proxy contest with nominations of nine candidates to Macy’s board, along with a statement criticizing "the Board's history of poor performance.”

Macy’s issued its latest statement this Sunday, saying it would “carefully review and evaluate” the improved proposal, though the company has previously indicated it’s prepared to fight Arkhouse if needed.

Arkhouse Managing Partners Gavriel Kahane and Jonathon Blackwell, in a statement released alongside their improved proposal, said, “We remain frustrated by the delay tactics adopted by Macy’s Board of Directors and its continued refusal to engage with our credible buyer group … Nonetheless, we are steadfast in our commitment to execute this transaction.”

Rapid Reversal

Founded in 1858 as R.H. Macy & Co., Macy’s grew from its roots as a small New York dry goods store into an American cultural icon. For much of its life, it remained just that – a storied New York City department store that many in the U.S. thought they’d never visit.

That changed with the launch of the retailer’s national expansion strategy at the start of the 21st century. An aggressive ten-year period of rival chain and single-store acquisitions grew the business to a peak of nearly 900 locations across 45 states.

Macy’s unraveling is now progressing nearly as quickly as its ascendancy. A combination of discount retailers, high-end brands, and Amazon-led online competitors has pressured the business from all sides. With no more immunity than other legacy retailers, Macy’s has now lost more than a quarter of its market share since 2012.

UBS analyst Jay Sole doesn’t see this trend stopping any time soon. “Each of these groups has major advantages over Macy’s in either price, product, or service.” He adds, “It's unlikely Macy’s can change this dynamic. We model revenues falling at a high-single-digit annual rate on average over FY24-28E.”

Someone’s Got it Wrong

In response to December’s approach, Macy’s management launched a new restructuring initiative and long-term revitalization plan named “Bold New Chapter.” The headline strategy: closure of 150 Macy’s brand stores over the next three years, with additional investment in new locations for the company’s better-performing upscale Bloomingdale’s and Bluemercury brands.

Arkhouse, shareholders, and analysts have all expressed skepticism.

In reference to the company’s various post-proposal initiatives, Arkhouse said, “The stock price selloff following these announcements is a strong indication of shareholder concern about maintaining the status quo.” Managing partner Gavriel Kahane adds, “I hope we get to close on the company before they start these store closures.”

His position may be two-pronged:

  1. UBS’ Sole thinks the Bold New Chapter plan could just accelerate Macy’s decline, noting that “the store closures will lead to further share loss which won't be offset by the additional growth initiatives.”

  2. The store closure strategy also contemplates a liquidation of between $600 to $750 million of Macy’s newly empty locations. Sole says the plan “erodes bulls' thesis [that Macy’s] is a real estate play since Macy’s will have fewer assets left to monetize as time goes on.”

Kahane aknowledges the real estate angle, but disputes speculation that his firm is interested only in a store liquidation. “So we’re clearly here for the real estate, right,” he said. “We are here because we think they have a lot of real estate on the balance sheet, and that real estate is valuable because it has a great tenant in it.”

Kahane says his group’s investment thesis is focused on a turnaround in the department store business, which he feels is a more realistic undertaking for a privately-held Macy’s.

Others have wondered whether the current back-and-forth is really part of a strategy designed to prompt another buyer to come in on top of the Arkhouse-led group.

Arkhouse disputes this as well. “I will feel so much worse if someone comes in and beats us here,” said Kahane. “I’d also be much more surprised,” he adds.


JetBlue (Nasdaq: JBLU) and Spirit Airlines (NYSE: SAVE) have officially terminated their $3.8 billion merger agreement due to regulatory opposition.

Mondi plc is considering a takeover offer for DS Smith plc, a UK-based packaging company, in a deal that could be valued at more than £10 billion.

Cinven agreed to acquire a majority stake in fund administration provider Alter Domus at a €4.9 billion valuation.

Bridgepoint Group is in advanced talks to sell Dorna Sports, a sports management and marketing firm, in a deal that could be valued at around $4.4 billion.

Vista Outdoors (NYSE: VSTO) rejected a $2.9 billion takeover offer from MNC Capital and disclosed a separate offer from Czechoslovak Group (CSG) for its sporting products business.

BlackRock and Morgan Stanley Infrastructure Partners have agreed to acquire the Portland Natural Gas Transmission System from TC Energy and Northern New England Investment Company for $1.14 billion.

United Rentals, Inc. (NYSE: URI) agreed to acquire Yak Access, Yak Mat, and New South Access & Environmental Solutions from Platinum Equity for $1.1 billion.

Sosteneo, the investment arm of Generali, acquired a minority stake in Enel's energy storage unit for €1.1 billion.

Boeing (NYSE: BA) is in talks to acquire Spirit AeroSystems (NYSE: SPR), a manufacturer of aerostructures for commercial airplanes and defense platforms, including the 737 MAX, that it had previously divested.

Summa Equity acquired a majority stake in STIM, a provider of fish health solutions.

General Atlantic acquired a minority stake in Plusgrade, a travel technology company specializing in revenue solutions for airlines and travel operators.

Hg agreed to merge and invest in Induver and Clover, two undisclosed targets in the software and services sector.

Affinity Equity Partners is nearing a deal to acquire Guardian Early Learning, an Australian childcare provider, from Partners Group.

Lee Equity Partners acquired PCS Retirement, a provider of retirement planning and related services, from LLR Partners.

Luxium Solutions, a portfolio company of SK Capital Partners and Edgewater Capital Partners, agreed to acquire PLX and PLX UK, two companies focused on the development and manufacturing of scintillation and photonic crystals.

Repsol (BME: REP) is preparing to sell its Norwegian oil and gas subsidiary, Repsol Norge, and has engaged Rothschild as an advisor.

Miovision, a Canadian intelligent transportation solutions provider, acquired Traffic Technology Services (TTS), a developer of connected vehicle technologies.


ADQ, Abu Dhabi’s sovereign wealth fund, is considering an IPO for Etihad Airways as soon as this year, per Bloomberg.


Tech, Vertical SaaS, & Misc. Enterprise

Mews, a hospitality-focused property management software provider, raised €101.4 million in new funding. Kinnevik led, with participation from Goldman Sachs, Notion Capital, LGVP, and Revaia.

Baseten, an AI infrastructure company focused on machine learning , raised $40 million in Series B funding. IVP and Spark Capital co-led, with participation from Greylock, South Park Commons, and Conviction Partners.

MoeGo, developer of a pet grooming software and payments platform, raised $24 million in Series A funding. Base10 Partners led, with participation from Digitalis Ventures, Conductive Ventures, and Uphonest Capital.

Media & Consumer

Topsort, a provider of retail media advertising solutions, raised $20 million in Series A funding from Upload Ventures, Quiet Capital, and Pear Ventures.


Synctera, a developer of embedded banking and finance software, raised $18.6 million in Series A-1 funding led by Lightspeed and Fin Capital, with participation from existing backers NAventures, Diagram, Banco Popular, and Mana Ventures.

Taiko Labs, an Ethereum Layer 2 scaling solutions provider, raised $15 million in Series A capital led by Lightspeed Faction, Hashed, Generative Ventures, and Token Bay Capital, with participation from Wintermute Ventures, Presto Labs, Flow Traders, Amber Group, OKX Ventures, and GSR.

Healthcare & Life Sciences

Phagenesis, a medical device company focused on treating neurogenic dysphagia, raised $42 million in Series D funding. EQT Life Sciences and Sectoral co-led, with participation from British Patient Capital, Northern Gritstone, and Aphelion.

Healthee, a provider of AI-powered healthcare benefits navigation, raised $32 million in Series A funding. Fin Capital, Glilot Capital Partners, and Group11 co-led, with participation from TriNet.

Aktiia, a developer of wrist-worn blood pressure monitoring technology, raised $30 million in Series B funding led by Redalpine, with participation from Khosla Ventures, Molten, Translink Capital, Verve, and 415 Capital.

Kismet, a provider of a digital healthcare platform for individuals with dual-caregiving responsibilities, raised $8.2 million in seed funding led by Prosus and Airtree.

Vitrue Health, an MSK-focused tech-enabled health platform, raised $7 million in new funding. MMC Ventures and Hambro Perks co-led, with participation from Simplyhealth Ventures, and Crista Galli Ventures.

Know Labs, a Seattle-based developer of non-invasive glucose monitoring technology, raised $4 million in new funding from Lind Partners.


Ardian is targeting more than $5.4 billion for its sixth private credit fund.

Cibus Capital raised $645 million across a pair of food and agriculture-focused middle market buyout and venture funds.

Entourage raised $30 million for its debut B2B SaaS venture fund.


1. The software private equity landscape.

• McKinsey shares an update on 2024 themes to watch for software investors. — McKinsey

2. Endowment performance and key metrics for 2023.

• NACUBO, TIAA, and Commonfund Institute release a sampling of freely available data from their 2023 endowments study. — NACUBO


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