Arkhouse is prepared to take Macy’s private with a bid of $5.8 billion, with managing partner Gavriel Kahane confirming to CNBC on Thursday. However, the activist investor has faced obstacles due to the department store retailer’s lack of cooperation with regard to due diligence. Kahane mentioned during an appearance on CNBC’s “Money Movers” that based on publicly available information, it is unlikely for any bank to provide committed financing at this stage, and that the management’s response in the days and weeks ahead will determine Arkhouse’s future actions. Arkhouse had previously stated its intention to take all necessary measures to acquire Macy’s, including reaching out directly to shareholders. In December, Kahane’s Arkhouse and Brigade Capital made an unsolicited offer to Macy’s management to privatize the company at $21 per share, representing a premium of over 32%. Investment bank Jefferies has issued a highly confident letter, indicating its belief that the two firms will be able to secure the required capital to finalize the deal. Arkhouse has also noted the possibility of increasing its bid beyond the original $21-per-share offer, conditional on Macy’s management agreeing to sign a mutual non-disclosure agreement and permitting due diligence to commence. However, Macy’s board turned down the offer, stating on Sunday that it considers it “highly unlikely” for Arkhouse and Brigade’s proposed financing to be successfully executed. The board also declined to enter into a non-disclosure agreement or allow due diligence to proceed, with CEO and chair Jeff Gennette highlighting in a letter to Arkhouse and Brigade that “such an exercise would unnecessarily distract our management team.”
