NEW YORK: Macy’s says it has rejected Arkhouse Management and partner Brigade Capital Management’s US$5.8bil proposal to take the department store operator private, citing concerns over deal financing and valuation.

       Like other legacy department store operators, Macy’s has struggled to compete against younger, online competitors or peers with smaller brick-and-mortar footprints.

       This has given Arkhouse, a real-estate-focused investing firm, and Brigade, a hedge fund, an opening to put pressure on Macy’s to explore a sale.

       The two investment firms submitted a proposal last month to acquire the shares of Macy’s they don’t already own for US$21 a share. The duo sees “the potential for a meaningful increase to the original proposal if we are granted access to the necessary due diligence,” Arkhouse said in a statement.

       But Macy’s said the offer was not financially attractive or credible enough to grant such access.

       “The board has determined not to enter into a non-disclosure agreement or provide any due diligence information to Arkhouse and Brigade,” Macy’s said in a statement.

       Macy’s also said that information furnished by Arkhouse and Brigade “failed to address its board’s concerns regarding Arkhouse and Brigade’s ability to finance their proposed transaction”.

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       Macy’s is not running a sale process with other parties and no other unsolicited bidders have emerged that meet the company’s expectations about a potential deal, according to people familiar with the matter.

       It expects a successful bidder to show enough committed financing and have a track record of pulling off buyouts in the retail sector, the sources added. — Reuters