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Tuesday, December 6, 2022

Kohl’s Possible Sale: Department store chain, target of activist investors, gets a $9 billion buyout offer

NEW YORK — The quest for control of Kohl’s is heating up.

On Saturday, the retailer received an unsolicited $9 billion bid to go private from a consortium backed by an activist investor, according to published sources. The hedge fund, Starboard Value LP, offered to buy the department store chain for $64 a share in cash, The New York Times and The Wall Street Journal both reported.

Starboard controls Acacia Research Corp., the group making the buyout overture, according to the reports. Its offer would be a significant bump up from the Kohl’s current share price, which closed at $46.84 on Friday.

A spokesperson for Kohl’s didn’t immediately return a request for comment.

The company has been in the crosshairs of activist investors and short sellers for months. In December, Engineer Capital said in a letter to Kohl’s board of directors “the public market is not appreciating Kohl’s in its current form,” and “there is no excuse for the Board to cling to the status quo.”

It was the second push from an activist investor group in 2021. Kohl’s settled with another group in April, agreeing to appoint three new members to its board.

And last week, another activist hedge fund, Macellum Advisors, said in a letter Kohl’s board of directors and leadership team spent last year “materially mismanaging the business and failing to implement necessary” improvements. The hedge fund owns about 5% of Kohl’s stock.

Macellum said it planned to nominate a slate of new board members unless Kohl’s decides to work with the firm. If Kohl’s board won’t make changes, the company should explore a sale, the activists said.

In a statement Tuesday, the retailer said Macellum had been “unwilling to constructively engage” with Kohl’s and said the fund’s letter and announcement were “distracting.”

The knives have been out for the Kohl’s for months as one activist investor after another has written to the board or publicly advocated for a change in leadership, company strategy or both.

Brick-and-mortar giants such as Walmart and Target, as well as discount chains like TJ Maxx and Burlington have been pressuring department store chains for years. Some, such as Sears and Neiman Marcus, have been driven into bankruptcy.

But Kohl’s has taken steps to draw shoppers in recent years, including partnering with Amazon to accept returns on Amazon purchases at its own stores, adding new clothing and homegoods brands, expanded its merchandise, and even leasing out space at a handful of stores to Planet Fitness and Aldi.

Nathaniel Meyersohn conributed to this story.

The video featured in the player above is from a previous story.

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