Retailer Macy's ended seven months of buyout talks with activist investors Arkhouse Management and Brigade Capital Management, saying those dissident shareholders didn't have financing securely lined up and the deal wouldn't bring any "compelling value" to the department store chain.

New York-based Macy's — parent of not only its namesake stores but also Bloomingdale's and Blue Mercury — said on Monday that its board had unanimously decided to terminate discussions with Arkhouse and Brigade "that have failed to lead to an actionable proposal." Macy's management team will now "return its full focus" to executing its "A Bold New Chapter” strategy, an initiative that includes closing 150 underperforming stores in the next three years. Macy's has begun selling some properties and put others on the block as part of its new course.

Department stores have been particularly squeezed in recent years, with Lord & Taylor liquidating, J.C. Penney attempting a comeback after Chapter 11, and Kohl's still trying to find its footing. Consumers have cut back on discretionary spending, and shoppers are going to discounters such as Walmart and Target, and off-price retailers like T.J. Maxx and Burlington.

Arkhouse and Brigade, looking to take Macy's private, were expected to try to unlock the value of the retailer's vast real estate portfolio by selling some of it. Tony Spring, who officially became Macy's CEO in February, and management have taken a close look at the company's holdings and decided to downsize its store fleet and offload some properties, looking to eventually generate $750 million in proceeds.

"The news that Macy’s is terminating talks with Arkhouse and Brigade is to be welcomed," Neil Saunders, a retail analyst and managing director of GlobalData, said in a note to clients Monday. "Other than seeking to monetize Macy’s real estate assets for short-term gain, neither party brought any long-term value to the table. Indeed, many of the activist investor proposals would have significantly weakened Macy’s and hampered its ability to survive as a retail operation."

Macy's declined to comment, and Arkhouse and Brigade didn't respond to an email from CoStar News seeking comment. Arkhouse is a real estate investment firm while Brigade has a history of investing in retailers.

Shares of Macy's dropped as much as 15% Monday in the wake of the company's announcement.

In its statement, Macy's said it had engaged in good faith talks with Arkhouse and Brigade for more than seven months since the dissidents' initial outreach in December, when they first expressed interest in acquiring the company. Macy's rejected that offer, totaling $5.8 billion, or $21 a share. The dissidents have since raised their offer several times, and it most recently stood at $24.80 a share in cash, or about $6.9 billion.

“As the board has consistently demonstrated throughout this process, we are open-minded to exploring all paths to enhancing shareholder value," Paul Varga, lead Macy's independent director, said in a statement. "At this time, after careful review, we have concluded that Arkhouse and Brigade’s proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources, and information shared during this process."

In March, Macy's said it had entered into a confidentiality agreement with Arkhouse and Brigade to facilitate a due diligence process.

"The company has since expended hundreds of hours addressing Arkhouse and Brigade’s extensive diligence requests, facilitating diligence meetings with multiple members of the company’s senior management as well as its financial and real estate advisers, and providing thousands of documents with a level of detail that went well beyond what is customarily required to obtain financing for a public company acquisition," including providing store-by-store profit and loss statements and full-form leases for each Macy’s, Bloomingdale’s and Bluemercury location, Macy's said. It added that "the company also permitted Arkhouse and Brigade to contact — and share confidential information with — over a dozen credible financing sources."

Arkhouse mounted a proxy fight that ended when Macy's agreed to put two of its nominees on its board in April. At that time, both sides said discussions would continue about a possible sale of the retailer to Arkhouse and Brigade.

By a June 25 deadline, Arkhouse and Brigade were supposed to state the best purchase price per share they were willing to pay to acquire Macy's and to provide fully negotiated commitment papers for all the debt and equity needed to finance the revised proposal, according to the retailer.

Instead, on June 26, Arkhouse and Brigade submitted "highly conditional and unsigned drafts of financing commitment letters, subject to numerous conditions," according to Macy's.

Those “asset-based” financing papers were "tied to the valuation of the company’s owned real estate, and subject to appraisals, credit rating outcomes, and loan-to-value thresholds," Macy's said.

"Finalizing and funding these commitment letters would require lengthy additional diligence, including independent, third-party appraisals of over 140 of the company’s individual store and distribution center locations," the retailer said.

Macy's management said its new strategy is enjoying some success.

“While it remains early days, we are pleased that our initiatives have gained traction, reinforcing our belief that the company can return to sustainable, profitable growth, accelerate free cash flow generation and unlock shareholder value," Spring said in a statement.

Macy’s “A Bold New Chapter,” is gaining traction across all three of its strategic pillars, strengthening the Macy’s nameplate, accelerating the growth of its luxury chains and simplifying and modernizing end-to-end operations, according to the retailer. The company plans to invest in the 350 Macy's stores it plans to keep open, and sales at its "First 50" nameplate stores where it's made such investment are already outperforming other go-forward locations, officials said during a first-quarter earnings report in May.

The retailer said it will provide an update on its progress when it reports its second-quarter earnings next month.

"Macy’s has played a good game in patiently furnishing the activist investors with information and allowing their nominees to take some seats on the board ... However, Macy’s is also right to terminate dealings that were not proving to be fruitful or serious in terms of financing," Saunders said. "Such decisive action is a sign of strength from Macy’s which, under Tony Spring, has a much clearer sense of vision and purpose in working to turn the business around. While Macy’s has a lot of work to do, it must be allowed the breathing space and time to enact changes that will put it on a path to growth and add value for investors."

Bank of America Securities and Wells Fargo Securities are acting as financial advisers and Wachtell, Lipton, Rosen & Katz is acting as legal adviser to Macy's.