The retailer also said it continues to engage with Arkhouse and Brigade Capital Management over their revised buyout proposal.
In March, Arkhouse and Brigade raised their offer to acquire Macy's stock they do not already own for $24 per share, valuing the retailer at $6.6 billion, after the company rejected an earlier bid made in December.
Arkhouse, which has a 4.4% stake in Macy's, then nominated nine director candidates to the company's board in February, triggering a proxy battle.
Arkhouse said on Wednesday it withdrew the rest of its board nominees after the company appointed Richard Clark and Richard Markee as independent directors.
"So it ends the potential for a proxy fight, which would have been very expensive and a big distraction and probably Arkhouse didn't even really want it because they're trying to buy the whole company," Morningstar analyst David Swartz.
Clark and Markee will join the board's finance committee, which in addition to its existing responsibilities, will oversee the evaluation of the proposal from Arkhouse and Brigade, Macy's said.
"Our buyer group has begun receiving due diligence to progress discussions toward a potential transaction to acquire the company," Arkhouse said.
Since the first bid in December, Macy's has cut 2,350 jobs and in late February announced a turnaround plan where it would shutter around 150 stores through 2026.
The department store chain is facing weak demand due to rising competition from online retailers and lower relevance among younger shoppers.
Macy's board will now consist of 15 directors. The company's shares were down 1.9% at $19.32 in early trading.
