Macy’s is rejecting a $5.8 billion takeover offer from investment firms Arkhouse Management and Brigade Capital Management, saying they didn’t provide a viable financing plan.

Arkhouse and Brigade offered $21 for each of the remaining shares in Macy’s they don’t already own. Shares of New York-based Macy’s rose 3.6% today to close at $18.26.

Last week Macy’s said that it was laying off about 3.5% of its total headcount, or about 2,350 employees. The department store operator also announced that it was closing five locations.

Macy’s said its board reviewed the investment firms’ proposal and not only had concerns about the financing plan, but also felt there was a “lack of compelling value.”

“Following careful consideration and efforts to gather additional information from Arkhouse and Brigade, the board determined that Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s Inc. shareholders,” Jeff Gennette, outgoing chairman and CEO of Macy’s, said in a statement. “We continue to be open to opportunities that are in the best interests of the company and all of our shareholders.”

Tony Spring takes over as president and CEO of Macy’s next month.

Neil Saunders, managing director of GlobalData, said in an email that Macy’s management doesn’t seem to want to do a deal.

“They likely see the real-estate focused approach of Arkhouse as wrong for the business — and, they have a point,” Saunders said. “Monetizing real estate with no focus on revitalizing the retailer and bolstering trading would produce short-term gains but severely weaken long-term prospects.”

But Saunders noted that Macy’s has also had difficulty adding value, having neglected its stores and retail fundamentals for years.

“Unless other bidders step forward, Macy’s shareholders are caught between the devil and the deep blue sea. They can back existing management on the continued promise of jam tomorrow, or cash out to an investor whose plans are unknown and could well hasten the demise of one of retail’s most iconic names,” Saunders said.

The moves come as Macy’s and other department stores are under pressure to increase sales.

Before the pandemic, many department stores were struggling to compete with online rivals. Then, the pandemic-induced shutdowns of stores in the beginning of the health crisis pushed some to the brink of peril. Neiman Marcus and JCPenney both filed for Chapter 11 bankruptcy, emerging as smaller entities. As stores reopened, many retailers enjoying outsized sales as shoppers stayed close to home and benefited from pandemic aid. But inflation set in and, even though pricing pressures have abated, shoppers have remained cautious.

Macy’s has been embracing a number of moves to shore up sales, including accelerating the expansion of its small-format stores as it looks to cater to shoppers seeking more convenient locations. It announced in October it plans to add up to 30 new small-format locations through the fall of 2025, bringing the total number of such stores to roughly 42. The next round of expansion starts in fall 2024.

Associated Press Retail Writer Anne D’Innocenzio in New York contributed to this report.