Kohl’s Says Offers From Firms To Acquire the Company Do Not Reflect Its Value

Kohl’s on Friday said that offers from two firms looking to acquire the company “do not adequately reflect the Company’s value in light of its future growth and cash flow generation.”

Kohl’s confirmed last week that it received offers from two firms looking to acquire the company.

“The Board is committed to maximizing the long-term value of the Company and will review and pursue opportunities that it believes would credibly lead to value consistent with its performance and future opportunities,” Kohl’s wrote in a statement.

The Kohl’s board also announced that it has instituted a “limited-duration shareholder rights plan,” which will help the company avoid an unwanted takeover and is effective until February 2023.

Kohl’s shares were up less than 1% on Friday morning.

In response to the statement from Kohl’s, Macellum Advisors GP, LLC, which holds almost 5% of outstanding common shares at Kohl’s, said in a statement, “We are disappointed and shocked by Kohl’s hasty rejection of confirmed indications of interest. This morning’s rejections – which come just two weeks after outreach from potential acquirers – only validates for us that a majority of the Board is entrenched and lacks objectivity when it comes to evaluating value-maximizing sale opportunities relative to management’s historically ineffective standalone plans.”

Sycamore, a private equity firm, expressed that it was looking to pay around $65 per share for Kohl’s, CNBC reported last week. The news came shortly after Acacia Research reportedly offered to pay about $64 a share for the department store chain. According to reports, both groups were looking to sell Kohl’s property to raise funds via a partnership with Oak Street Real Estate Capital.

Kohl’s acknowledged the offers of interest but said it will not comment on the matters until “it determines it is in the best interests of shareholders to do so.”

In the last few months, Kohl’s has faced mounting investor pressure to make major changes to its business structure to improve profitability and shareholder value.

In January, Macellum sent an open letter to other shareholders to call out Kohl’s for “mismanaging” the business and “failing to implement necessary operational, financial and strategic improvements.”

The letter said Kohl’s had “produced some of the worst revenue numbers in its retail peer group since the economy began reopening in 2021.”

In response to the letter, Kohl’s said in a statement that it has “continued to engage with Macellum since the settlement” and is “disappointed with the path they have taken and the unfounded speculation in their announcement and letter.”

Macellum is not the only investor to pressure Kohl’s to make changes in recent months. In early December, investor Engine Capital LP, which owns 1% of outstanding shares at Kohl’s, asked the company to separate its physical store business from its e-commerce business. Engine also asked the company to run a market test to determine how much certain financial sponsors would pay per share for the company.

“Given leadership’s failure to create value through operational excellence and strategic initiatives over long periods of time, it is time for the Board to accept the fact that the public market is not appreciating Kohl’s in its current form,” wrote Engine in the letter. “Even the most patient long-term shareholders cannot be expected to endure the punishing underperformance and perpetual value disconnect seen at Kohl’s.”

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