Macy's ends buyout talks with Arkhouse and Brigade after months of negotiations.

• Macy's announced Monday that its board had unanimously decided to end negotiations with the activist group seeking to acquire the retailer for approximately $6.9 billion.
• For months, Arkhouse and Brigade had been trying to acquire the renowned retailer.
• In February, CEO Tony Spring took over Macy's and is currently leading a turnaround effort.

The department store announced on Monday that its board had unanimously decided to end negotiations with the activist group seeking to take the retailer private for approximately $6.9 billion, citing financing and premium concerns as insurmountable.

Paul Varga, Macy's lead independent director, stated in a press release that Arkhouse and Brigade's proposal lacks certainty of financing and does not deliver compelling value.

For months, Arkhouse and Brigade have been trying to acquire the renowned retailer. This month, the bidders raised their offer to $24.80, marking the latest in a sequence of price increases since they initiated their takeover attempt last year.

Macy's disclosed more than what is typically required during a due diligence period, providing the bidder group with store-by-store profit and loss information and leases for each location. Additionally, the company stated that Arkhouse and Brigade were granted permission to share this confidential information with over a dozen "reliable financing sources."

Earlier this year, Arkhouse announced its intention to launch a proxy fight for control of Macy's. However, after initial rejections, the two sides were able to reach a settlement in April, resulting in the addition of two independent directors to the Macy's board.

Shares of Macy's fell roughly 12% in premarket trading Monday.

Macy's, led by CEO Tony Spring, is currently undergoing a turnaround effort. The department store operator announced earlier this year that it would close approximately 150 of its namesake stores and open new locations for its two brands, Bloomingdale's and Bluemercury, which have shown stronger results. Additionally, Macy's is opening smaller locations in busy strip malls in the suburbs.

The department store operator's efforts to increase sales have been hindered by high inflation, as consumers become more selective about spending on non-essential items. Macy's, too, has struggled to remain relevant as younger shoppers opt for online retailers like Shein, big-box stores like Walmart, and off-price chains like T.J. Maxx instead of traditional department stores.

Macy's anticipates its net sales for the upcoming fiscal year to fall between $22.3 billion and $22.9 billion, a decrease from $23.09 billion in 2023. The company expects comparable sales, which exclude the effects of store openings and closures, to range from a decline of approximately 1% to a gain of 1.5% on an owned-plus-licensed basis and including third-party marketplace sales.

In a late May earnings call, Spring stated that Macy's is in the "early stages" of revitalizing its flagship stores. However, he emphasized that the first 50 stores where Macy's had invested in increased staffing, improved merchandise displays, and special events had shown significant improvement in sales results.

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