Macy’s compromises, moves toward privatization

Macy’s compromises, moves toward privatization

After private equity investment companies Arkhouse Management and Brigade Capital Management significantly increased their acquisition offer to US$6.6 billion, after more than a month of contact, Macy's Inc. yesterday announced a preliminary compromise with the acquirer and agreed to partially restructure its board of directors members and actively responded to the privatization proposal of the acquirer Arkhouse Management Company.

The company issued a statement yesterday that effective immediately, Richard (Ric) Clark and Richard (Rick) L. Markee will join Macy's board of directors as independent directors and will also become members of the company's finance committee. The committee will be responsible for a detailed review of the private acquisition plan proposed by Arkhouse and Brigade Capital Management, as well as the evaluation of other possible alternatives.

To reach the agreement, Arkhouse has withdrawn its earlier submission of board members, thus ending a proxy fight with Macy's over control of the board.

Clark, the newly appointed director, has extensive experience in the real estate industry and mergers and acquisitions. As the co-founder and managing partner of WatermanClark, he has held senior positions in Brookfield Property Group, which has assets of more than US$200 billion.

Another new director, Markee, has held senior leadership roles in different retail companies. He initially worked at Target and served as vice chairman and U.S. regional president of Toys "R" Us from 2003 to 2006. Thereafter, he served as Chairman and CEO of Vitamin Shoppe Inc. Markee has also served as a director of Collective Brands Inc., the Sports Authority Inc., Dorel Industries Inc. and Pet Supplies Plus, and he currently serves on the board of directors of Five Below.

Gavriel Kahane and Jonathon Blackwell, managing partners of Arkhouse, said in a statement that the newly appointed directors and a specially established finance committee will ensure that discussions between the two parties remain constructive while promoting the serious and efficient processing of the privatization proposal.

Macy's said it will continue to have conversations with Arkhouse and Brigade about the privatization proposal. In addition, personnel adjustments have also been made within the company. Current CEO Tony Spring has been promoted to chairman of the board of directors, and Douglas Sesler (real estate expert) has been nominated as a candidate for board election at the next annual shareholder meeting and has been appointed as an independent director. These changes demonstrate Macy's positive attitude in dealing with privatization proposals and internal management, as well as comprehensive preparations to ensure the company's future development.