Macy’s, Arkhouse take-private fight continues after proxy settlement

Tony Spring was already working against the clock to turn Macy’s around.

Now, the CEO will have two fresh faces on the department store retailer’s board of directors as it weighs whether to bet on his vision or sell the nearly 166-year-old retailer to activist investors.

The board appointments, announced this week that put an end to a proxy fight with activist Arkhouse Management, are the latest development in a broader, and so far, unsuccessful effort by Arkhouse and fellow bidder Brigade Capital Management to acquire the iconic but struggling American department store retailer.

“It stops the pressures in the here and now,” said Neil Saunders, managing director of research firm GlobalData. “But in a way, you’re letting the wolf into the henhouse.”

Arkhouse first made a bid in December to buy Macy’s and take the company private at $21 per share. Macy’s rejected the offer. Arkhouse later launched a proxy fight, putting forward nine nominees to Macy’s 15-person board, and raised the bid to acquire the company.

“The Macy’s, Inc. Board is continuing to engage with Arkhouse and Brigade regarding their proposal to acquire the Company,” the company said in a statement announcing the new independent directors. “The Board is open-minded about the best path to create shareholder value and is committed to continuing to take actions that it believes are in the best interests of the Company and all Macy’s, Inc. shareholders.”

For Macy’s, this week’s settlement — an agreement to name two of Arkhouse’s nine candidates to its board — could pause the distraction and high costs of a prolonged campaign for shareholder support. For Arkhouse and Brigade, the move could help hand the keys to investors whose emphasis on real estate, not retail, has spurred fears that their acquisition could spell the end of Macy’s.

Both Macy’s and Arkhouse struck a conciliatory tone in their statements this week. But one thing is clear: The battle at Macy’s is not over.

Other department store chains have faced challenges from activists in recent years, and even when those efforts fall short, the pressure can bring about sweeping changes.

With Kohl’s, for example, CEO Michelle Gass left the company to lead denim maker Levi Strauss after a lengthy battle with Kohl’s activists. At the time, her predecessor at Levi, Chip Bergh, said activist investors helped drive her out of Kohl’s doors.

Even before Macy’s had activist investors breathing down its neck, Spring faced an uphill battle.

The department store — with its flagship store in the heart of New York City’s Herald Square and its Macy’s Day parade that attracts the attention of millions of families on…