(Bloomberg) -- Macy’s Inc. bonds fell alongside the department store chain’s biggest stock plunge in four years, after the company said it is ending discussions with Arkhouse Management Co. and Brigade Capital Management on a potential buyout.
The company’s 4.5% note due 2034 declined 5.8 cents to 82 cents on the dollar and its 6.125% bond due 2032 fell 2 cents to 94.5 cents, according to pricing source Trace as of 11:29 a.m. Monday in New York. Both notes, as well as some others, carry a change of control provision that would require repayment at 101 cents on the dollar in the event Macy’s is acquired, according to data compiled by Bloomberg.
Assuming that Arkhouse and Brigade “do not further pursue the transaction in a hostile fashion,” calling off the negotiations “takes some near-term upside” of a change of control trigger away from most of Macy’s bonds, CreditSights analyst James Goldstein wrote in a note Monday. He added that notes due in the 2030s remain attracted relative to the BB index.
The two suitors made a number of offers to buy Macy’s, climbing from $21 a share to $24.80 as of June, the retailer said in its statement. Macy’s board found the most recent bid not compelling enough, with the company adding that financing was not certain as “highly conditional and unsigned drafts” of asset-based financing commitment papers linked to Macy’s real estate holdings were submitted.
Shares plunged as much as 16%, the most since 2020, to $16.07.
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