The Real Deal New York

Could a buyout be Macy’s “white knight”?

David Einhorn's investment has fueled talks of a takeover

January 21, 2016 10:35AM


Macy’s in Herald Square

The future of Macy’s hangs in the balance, and the possibility of a buyout has some investors excited.

David Einhorn of Greenlight Capital invested in the department store this week, a development that further fueled talks of a possible buyout. For now the prospect is primarily an investor fantasy: It’s unclear who would step in to takeover the struggling retailer but it would require someone who is willing to take on a significant amount of debt.

For months, hedge fund Starboard Value pushed the department store to spin off its real estate assets as a real estate investment trust. After Macy’s rejected this plan, Starboard suggested that the store separate its big-city flagship stores from its mall properties, creating joint venture entities for each. Einhorn also suggested that a private equity firm should team up with a REIT to “unlock value,” Bloomberg reported.

Lawrence Haverty, a fund manager at Gamco Inc., which owns shares of Macy’s, has said that he would support a buyout that would work out to $60 a share in cash, but such a deal isn’t likely. Laurent Vasilescu, an analyst at Macquarie Capital USA, told Bloomberg that Macy’s — instead of a buyout — will likely strike a balance by closing down more of its failing stores and investing in the stores that have the most value. [Bloomberg]Kathryn Brenzel