Analysts at JP Morgan are said to have estimated Macy’s Herald Square properly in New York at $3bn alone. Credit: Shutterstock.

Real estate investment company Arkhouse Management and asset management company Brigade Capital Management have placed a bid of $5.8bn to make Macy’s private, according to media reports.

The proposal was allegedly made earlier this month (1 December) and was based on acquiring the Macy’s stock they don’t already own for $21 a share.

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According to Reuters, the investor group already has a big stake in Macy’s through Arkhouse-managed funds and has discussed the proposal with the department store chain, whose board subsequently met to discuss the offer.

Macy’s, Arkhouse Management and Brigade Capital Management declined to comment when approached by Just Style.

GlobalData’s retail managing director analyst Neil Saunders explained the investors were able to submit a bid to take the company private at a 32% premium over the current share price due to the retailer’s “years of chronic underperformance”.

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He pointed out this has put pressure on Macy’s share price and means the iconic department store chain is a “relatively attractive prospect.”

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Macy’s Inc chairman and CEO Jeff Gennette shared a cautious outlook for the company in August after it reported a loss for Q2. Net sales were down 8% from $5.6bn to $5.1bn with the decrease in sales being shown in both the brick-and-mortar and digital side of its business.

The company beat its expectations for Q3 with Gennette saying in November that he was confident about the company’s growth despite economic headwinds.

Saunders pointed out this takeover bid means Macy’s management must now make a judgement call: Either they show confidence in their future plans and keep Macy’s public, or they let Macy’s go private “in a transaction that will likely see the brand fade further and faster”.

He noted Macy’s is in a “tight corner” because some of the difficult decisions around the business have been put off for far too long and this investor group will see the potential of Macy’s real estate portfolio as opposed to its retail, which “is worth at least $6bn at a conservative estimate”.