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Kohl’s has received an unsolicited acquisition offer of $9 billion from a group led by an activist hedge fund, according to a Wall Street Journal report. There is a high likelihood that news of this bid will lead others to place offers on the table, and Reuters reports that a private equity firm is in the process of doing just that.
The Journal reported that Acacia Research Group, part of Starboard Value, is leading a consortium that has offered around $9 billion to acquire Kohl’s. The offer of $64 a share represents a 37 percent premium to Kohl’s closing price of $46.84 on Friday.
Acacia, which has a market value of $215 millon, said it is “highly confident” that it will be able to put together a debt financing deal to make the acquisition work.
Sycamore Partners is reported by Reuters to be putting together a separate bid to acquire Kohl’s for at least $65 a share. The private equity firm has reached out to Kohl’s about a potential deal and it is not yet known whether the retailer has indicated a willingness to go forward.
Kohl’s and the two would-be bidders have yet to comment on the reports.
The retailer has been under pressure from its own shareholders who say Kohl’s stock has consistently underperformed against its retail peers in recent years.
Engine Capital has been pushing for Kohl's to sell and lease back its real estate and split off its e-commerce business from its physical store operations in an effort to unlock shareholder value. The hedge fund maintains that buyers would pay $75 a share to acquire Kohl’s real estate and that its online operations are worth $12.4 billion as a standalone business.
Kohl’s also faced pressure last year from a group of activist investors — Macellum Advisors GP, Ancora Holdings, Legion Partners Asset Management and 4010 Capital — that want more board members with retail experience.
Macellum, which owns about five percent of Kohl’s shares, said the company should explore its strategic options, including an outright sale. The investor, which was successful in getting three new members added to Kohl’s board last year, said it plans to nominate new members this year.
Kohl’s leadership has consistently maintained that it has its business on the right path and that it would unveil its strategy next month at an investor day meeting.
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