Macy’s, Inc. (NYSE:M) shares are trading lower after the company announced today that it has terminated discussions with Arkhouse Management Co. LP and Brigade Capital Management, LP, citing the proposal does not provide compelling value.

The decision comes after months of engagement without reaching an actionable proposal with certainty of financing and compelling value.

Macy’s Board and management team have engaged with Arkhouse and Brigade since December 2023. In March 2024, a confidentiality agreement was signed to facilitate due diligence after an increased proposal from $21.00 to $24.00 per share, with potential for further increase upon access to detailed diligence.

Macy’s spent hundreds of hours addressing extensive diligence requests, providing detailed documents, and permitting contact with over a dozen financing sources.

Despite this, Arkhouse and Brigade failed to deliver a definitive, fully financed proposal by the agreed deadline, said the retailer.

On June 26, 2024, Arkhouse and Brigade submitted a “check in” letter with a $24.80 per share offer, which the Board found insufficient.

The accompanying financing papers lacked the certainty needed for a viable offer, leading to the termination of discussions.

The Board found the financing commitment letters highly conditional and not meeting the necessary standards.

They required further extensive diligence, including third-party appraisals of over 140 store and distribution center locations, which was deemed unacceptable.

Macy’s will now concentrate on executing its “A Bold New Chapter” strategy to enhance shareholder value, moving forward from the stalled acquisition discussions.

The company plans to share additional details on the progress underway as part of its second-quarter 2024 earnings report next month.

Macy’s stock has gained more than 2% in the last 12 months. Investors can gain exposure to the stock via Invesco S&P MidCap 400 Pure Value ETF (NYSE:RFV) and SPDR S&P Retail ETF (NYSE:XRT).

Price Action: M shares are trading lower by 15% at $16.22 at last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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