(Bloomberg) -- Macy’s Inc. received a $5.8 billion buyout offer from Arkhouse Management and Brigade Capital Management, a wager that the venerable retailer can execute its turnaround better as a private firm.

The investors offered $21 a share for the department store operator, people with knowledge of the matter said, asking not to be identified discussing confidential information. Macy’s stock rose as much as 16% in Monday trading in New York, the most in more than a year. The stock dropped 16% for the year through Friday’s close, while the S&P 400 Midcap Index gained 8.3% for the period.

Macy’s, Arkhouse and Brigade Capital declined to comment on the offer, which was first reported by the Wall Street Journal on Sunday.  

Retailers have lagged the overall rally in US stocks this year as investors worry higher interest rates will damp spending and as the companies struggle to maintain the pace of growth seen during the pandemic. Department stores in particular have been confronting a broader shift in consumer habits as shoppers gravitate toward specialty and off-mall retail. 

Macy’s, which operates the Bloomingdale’s chain alongside its own namesake department stores, last month reported a 7% same-store sales decline in the third quarter. 

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The offer comes as Macy’s, perhaps best-known for its annual Thanksgiving Day Parade in New York City, readies for a changing of the guard. Chief Executive Officer Jeff Gennette is retiring in February after nearly seven years, ceding the position to Bloomingdale’s CEO Tony Spring.

Gennette has led Macy’s in recent years through an ongoing turnaround strategy called Polaris, which has included store closures and new store formats, job cuts and a focus on digital offerings. He joined Macy’s in 1983 as an executive trainee and worked his way up the executive ranks before becoming CEO in 2017. 

During Gennette’s tenure, Macy’s became the target of activist investor Jana Partners, which called on the company to boost its valuation by spinning off its e-commerce business. Starboard Value LP had also previously pushed Macy’s to wring more money from its real estate holdings and consider forming a REIT. 

Macy’s real estate is worth at least $6 billion, Neil Saunders, managing director at GlobalData, wrote in a note. And there would be “some short-term gains” to actions such as an e-commerce spinoff. But the retailing business could find itself in “the worst of all worlds” without reinvestment of those profits to support it, Saunders said.

“Macy’s would lose its safety net of solid assets and the low store costs that accrue from the ownership of shops,” he wrote.  

In 2017, Macy’s also held early talks with Hudson’s Bay Co. about a possible takeover, Bloomberg reported at the time, though talks eventually fell through. 

--With assistance from Crystal Tse, Matthew Monks and Olivia Rockeman.

(Updates shares and adds analyst comment in the ninth and 10th paragraphs.)

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