Arkhouse Secures Financing for $5.8 Billion Bid to Take Macy’s Private

Arkhouse, an activist investor, has confirmed that it has secured financing for its proposed $5.8 billion bid to take Macy’s private, according to Gavriel Kahane, the managing partner. The bid, which was submitted in collaboration with Brigade Capital, seeks to acquire Macy’s at $21 per share, representing a premium of over 32%. Jefferies, the investment bank, has expressed confidence in the financing, providing a highly confident letter supporting the capital-raising capabilities of the two firms.

Despite having the financing in place, Arkhouse has faced obstacles in the form of Macy’s non-cooperation on due diligence. Macy’s board rejected the unsolicited bid on Sunday, citing skepticism about the successful execution of the proposed financing. The board also declined to enter into a non-disclosure agreement or permit due diligence to proceed, emphasizing concerns about potential distraction to the management team.

Kahane’s Arkhouse mentioned the possibility of raising the bid beyond the initial $21-per-share offer if Macy’s management agrees to a mutual non-disclosure agreement and allows due diligence to commence. The activist investor had previously stated its intention to take all necessary steps, including direct engagement with shareholders, to acquire Macy’s.

In a related legal development, Washington state Attorney General Bob Ferguson has filed a lawsuit seeking to block the proposed merger of Kroger and Albertsons, two major grocery chains. Ferguson argues that the $25-billion deal would harm consumers, reduce choices, and lead to higher prices. Kroger, based in Cincinnati, is looking to acquire Albertsons, headquartered in Boise, Idaho. The suit claims that the merger would account for more than half of grocery sales in Washington, impacting over 300 locations.

The Federal Trade Commission is expected to review the merger next month, and California is also reportedly considering legal action. Kroger, responding to the lawsuit, announced a delay in the timeline for closing the deal due to ongoing dialogues with regulators. The company anticipates closure in the first half of its fiscal year, ending in mid-August, and asserts that the merger will bring lower prices for consumers.

However, concerns have been raised by the United Food & Commercial Workers, Local 3000, representing Kroger and Albertsons employees, as well as an Economic Policy Institute analysis suggesting potential negative consequences for grocery workers if the merger proceeds. Last year, Kroger and Albertsons had announced plans to sell over 400 stores and assets to C&S Wholesale Grocers in an effort to address market dominance concerns. The two grocery chains agreed to merge in 2022 to compete with major players like Walmart and Amazon in the grocery sector.

Financial Desk