A consortium backed by activist hedge fund Starboard Value LP has paid around $9 billion to buy department store Kohl’s Corp, according to people familiar with the matter. offered.
A group led by Acacia Research Corp., which controls Starboard, offered to buy the department store chain on Friday for $64 a share in cash, the people said. It told the company it had received assurances from bankers that it would be able to secure funding for the bid, the people said.
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There are no guarantees that the group will eventually assemble all the necessary funding and make a firm offer, or that Kohl’s will be receptive. Other suitors may also show up. But Kohl’s shares closed at $46.84 on Friday, so the offer represents a 37% premium.
Menomonee Falls, Wisconsin-based Kohl’s has been under pressure to boost its stock price, which was up early last year but hasn’t changed much in about two decades. Two activist shareholders — Macellum Advisors GP LLC and Engine Capital LP — recently urged the company to consider the sale.
Kohl’s said earlier this week that its strategy is delivering results and that its board “regularly works with specialist advisors to evaluate avenues that have the potential to create long-term value.” It said it plans to unveil its strategic plans at an investor day in March.
The little-known Acacia has a market value of just $215 million, but the consortium told Kohl’s that it received a so-called “very confident” letter from a bank claiming it will be able to to obtain a debt financing package for part of the bid, the people said. While such letters are not a guarantee, they can be a useful vote of confidence.
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Other details of the consortium’s proposal – and who is in the group – could not be ascertained. Reuters reported earlier this week that Acacia is reviewing a possible bid for Kohl’s.
If successful, the group could aim to sell the company’s properties to another party, which could make the transaction easier to complete. Activists have suggested that Kohl’s consider sale-leasebacks of its properties, which they estimate could be worth $7 billion or more.
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Macellum said in an open letter to Kohl’s shareholders on Tuesday it had urged the company to hire additional directors with retail experience or hire bankers to explore a sale.
Before Starboard invested in the company and joined the board in 2019, Acacia was primarily a patent holding company. It now focuses on buying and improving businesses. In October, the company bought privately held Printronix Holding Corp, a maker of line matrix printers, for $33 million and made bids for other companies including Comtech Telecommunications Corp.
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Starboard, led by Chief Executive Jeff Smith, is one of the most visible activist investors. It holds seats on the boards of companies such as Papa John’s International Inc. and NortonLifeLock Inc.
Write to Cara Lombardo at [email protected]