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By Abigail Summerville and Svea Herbst-Bayliss
NEW YORK (Reuters) - Macy's Inc has agreed to open its books to Arkhouse and Brigade Capital, people familiar with the matter said, a potential breakthrough in the investment firms' $6.6 billion bid to take the U.S. department store operator private.
Macy's, which had snubbed Arkhouse and Brigade's previous acquisition overtures, has now entered into a confidentiality pact with them that allows the exchange of commercially sensitive information, the sources said.
Having access to such due diligence could enable Arkhouse and Brigade to secure debt commitments to finance the deal, the sources added. The firms have so far only secured a letter from investment bank Jefferies Financial Group stating it is highly confident it will be able to provide debt for the deal.
The firms have also provided commitments for the equity portion of their bid. Their equity partners include Fortress Investment Group and One Investment Management US.
There is no certainty that the ensuing negotiations will lead to a transaction, the sources cautioned, asking not to be identified because the matter is confidential.
Arkhouse and Brigade declined to comment. Macy's did not immediately respond.
Arkhouse and Brigade have already raised their offer from $21 to $24 per share and have said they are open to increasing their bid further subject to due diligence. Macy's shares have been hovering around $22. They traded around $11 per share before news of the initial buyout offer broke.
Arkhouse has also mounted a board challenge against Macy's, seeking to replace a majority of directors by naming nine candidates for election to the 14 member board. It intends to push ahead with its challenge even as the two sides are holding discussions, a source familiar with the matter said.
In the meantime, Macy's has been restructuring its operations as it grapples with a slowdown in consumer spending that has weighed on its revenue and profit. Last month, it said it would shutter about 150 stores through 2026 as part of a plan that would help save $100 million in costs this year.
Reuters reported on Tuesday that Macy's rival Nordstrom was also in deal talks, as that department store operator's founding family revived a previously abandoned plan to take the company private.
(Reporting by Abigail Summerville in New York and Svea Herbst-Bayliss in Boston; Editing by Nick Zieminski)
