Czech billionaire investor Daniel Křetínský is on the hunt for retail investments, and pandemic-hit Macy’s Inc. is his latest target.
He has taken a 5 percent stake–or 15.5 million shares, through investments he controls–in the retailer, according to a regulatory filing Monday with the Securities and Exchange Commission. The filing, through Vesa Equity Investment S.à r.l., based in Luxembourg, indicates that its principal shareholder is EP Investment, which is “beneficially owned” by Křetínský.
The billionaire acquired the stake for “strategic investment purposes,” the filing shows, as Vesa intends to “engage in constructive discussions” with Macy’s management and board of directors, and other parties that “may relate to the business, management, operations (including cost structure), assets, capitalization, financial conditions, strategic plans, governance and board compensation and the future of the [Macy’s].”
That’s a wide range of potential topics for discussion between Vesa and Macy’s executives. Depending on market conditions, plus Macy’s prospects, the Vesa could elect to augment or reduce its shares in the embattled department store company.
“We maintain an open and ongoing dialogue with all of our shareholders,” a spokeswoman for Macy’s said.
Macy’s isn’t the first retail investment, for Křetínský, who holds a stake in French retailer Casino and has built a stake in German wholesaler Metro AG. In 2018, he and a partner tried to take over Metro, the German retail conglomerate that is now focused on its wholesale food operation. Metro’s management rebuffed the $6.5 billion offer and Křetínský went on to acquire more shares, bringing his total stake to nearly 30 percent, just shy of the requirement that would trigger a takeover bid. His investment group is best know for its expertise in energy deals, building out a company called Energeticky a Prumyslovy Holding, or EPH, through acquisitions across Europe.
While the exact purpose of the investor’s stake remains unknown regarding a long-term holding or shareholder activism, Macy’s is no stranger to either takeover attempts or to activist investors who want input on how management should run the business.
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The American retailer was on the receiving end of a takeover approach by Canada’s Hudson’s Bay Co. back in 2017. Talks between the two parties were still in the early stages when Macy’s management rejected the bid, and Hudson’s Bay chairman Richard Baker then turned his attention to Neiman Marcus. And Macy’s struggles also caught the attention of activist investor Starboard Value. Starboard, a hedge fund, had been pushing Macy’s to sell its real estate holdings in a move to extract value from the retailer’s assets. The hedge fund, which disclosed its stake in Macy’s in July 2015, finally exited its investment nearly two years later in March 2017.
Macy’s, like other apparel and broadlines retailers, has temporarily closed its stores since mid-March to help curb the spread of the coronavirus outbreak. The retailer last week began opening some stores, part of a gradual process that will follow state and local guidelines. Macy’s CEO Jeff Gennette has said the retailer will see modest sales when it reopens stores, given the ongoing uncertainty.