Stocks of Kohl’s Corp jumped 36 per cent on Monday following a Reuters report that claimed that the private equity firm Sycamore Partners had approached the departmental store operator with an acquisition bid worth $9 billion.
According to the report based on source information, Sycamore’s offer on Sunday said that the company was willing to offer at least $65 per share, representing a 39 per cent premium over the previous close of the stocks of Kohl’s.
Acacia Research, a company that is backed by Starboard Value, offered a value of $64 per share for the company in its bid last week.
Kohl’s acknowledged on Monday that it had received letters indicating interest in acquiring the company and that the board would act in “the best interests of the company and its shareholders.” The bidders were not named by the company in the statement.
Unhappy with Kohl’s performance, activist investors such as Macellum Advisors and Engine Capital have urged the company to consider all options, including an outright sale.
Kohl’s, like rivals Macy’s and Nordstrom, have lost a large market share to off-price and online retailers in recent years, but analysts have praised the recent partnerships that it has struck with LVMH’s Sephora and PVH’s Calvin Klein.
Engine, which owns about 1 per cent of Kohl’s, pushed the store on Monday to “aggressively pursue” a 37 per cent premium buyout offer, referring to Acacia’s offer.
According to some analysts, Kohl’s, which has a market capitalization of $6.52 billion, might be worth more.
“KSS is a strong FCF (free cash flow) generator, and it doesn’t seem to be getting credit by the market, making it reasonable to consider offers,” Citi’s Paul Lejuez wrote in a note.
Credit Suisse’s Michael Binetti stated in a note that it may merit a per-share value of between $70 and $80.
The announcement also pushed the stocks of rivals Macy’s and Nordstrom higher, putting the stock on track for its greatest day ever.
UBS analysts, on the other hand, are skeptical that a deal will be struck since they doubt Kohl’s real estate has enough value to serve as enough collateral. They stated that the activists’ planned operational adjustments would not stem market share losses and might not persuade creditors to lend enough money.
(Adapted from Investing.com)