Shares rose 14% on Monday after Arkhouse Management and Brigade Capital sweetened their take-private bid over the weekend, valuing the U.S. department store operator at $6.58 billion.
They boosted the offer price to $24 per share from $21 for the portion they do not hold, a 38% premium to Macy's closing price on Dec. 8 when acquisition talks began.
The retailer's shares, which have dropped 10% this year, were just below $21, with the investor group considering a bigger bid.
After rejecting Arkhouse's bid in January over deal financing and valuation, Macy's has yet to open its books to bidders while examining the latest offer. The real estate-focused investing group says it has worldwide lenders who will finance the purchase after due diligence.
Due to competition from cheaper physical and ecommerce alternatives and inflation-driven value-based buying, the company has struggled to maintain sales growth and profitability.
"Macy's should work with the investor group on a sale. "If it doesn't, it risks a hostile takeover," said Morningstar Research analyst David Swartz. Arkhouse and its affiliates have 4.4% economic exposure to Macy's, applying pressure by nominating nine retail, real estate, and capital markets directors to the 14-member board.
The company's rescue plan last week includes decreasing store counts and job responsibilities while enhancing goods and boosting personnel at Bloomingdale's and Bluemercury to boost sales.
Macy's forward price-to-earnings multiple, a proxy for stock valuation, is 6.73, lower than sector peers Kohl's (KSS.N) and Nordstrom (JWN.N), which have 10.36 and 10.28, respectively.
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