June 8, 2022: -On Monday, Kohl’s said that it has entered into exclusive negotiations with retail holding company Franchise Group, which proposes buying the retailer for $60 per share. Such a price tag would value Kohls at roughly $8 billion.
On Monday, Kohl’s shares closed at $42.12, providing the retailer with about $5.4 billion market value.
According to a person familiar with the matter, Franchise Group is working with Oak Street Real Estate Capital to finance the deal mainly through real estate. The person requested anonymity because the deal isn’t finalized. A representative for Oak Street Real Estate declined to comment.
Kohl’s said that the transaction remains subject to approvals of the companies’ boards of directors. There’s no guarantee that any agreement will be reached, he added.
The entire period of three weeks will allow Franchise Group and its financing partners to finalize the pending diligence and financing arrangements and for the parties to complete the negotiation of binding documentation, Kohl’s said.
The off-mall department store chain was first urged in December by New York-based hedge fund Engine Capital to take note of a sale or another alternative to boost its stock price. At the time, the shares of Kohl were trading nearly $48.45.
In mid-January, activist hedge fund Macellum Advisors pressured Kohl’s to consider a sale. Macellum’s CEO, Jonathan Duskin, argued that executives were “materially mismanaging” the business. He also said Kohl’s had plenty of potential lefts to unlock with its real estate.
In February, Kohl said it had brought on bankers at Goldman Sachs and PJT Partners to help the retailer field offers.
Last month, Kohl’s reported that its sales for the three months ended April 30 fell to $3.72 billion from $3.89 billion in 2021. The company also slashed its profit and revenue forecast for the full fiscal year, disappointing investors and muddying the picture for a potential deal. Kohl’s shares hit a 52-week high of $64.38 in late January.