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- A Wall Street consortium offered approximately $9 billion to purchase department store chain Kohl's.
- Kohl's faces pressure from activist investors to sell or make significant changes to the company.
- The company had largely been able to avoid the retail apocalypse, but saw slumping sales during the pandemic.
Acacia Research Corp. — a consortium backed by the hedge fund Starboard Value Group — placed an offer on Friday to purchase Kohl's for approximately $9 billion, the Wall Street Journal reported.
The consortium offered to buy the department store chain for $64 a share on Friday, sources told the Wall Street Journal's Cara Lombardo. Although it is unknown if Kohl's will accept the offer, bankers assured Acacia that the consortium would receive the funding needed for the buy.
The possible deal comes following a Reuters report earlier this week that found the retailer was in talks with Acacia about a bid. Although Acacia has a market value of $215 million, the group told Kohl's it received a "highly confident" letter from a bank stating it will be able to attain a debt-financing package for a portion of the bid, sources told the Journal.
Starboard and Kohl's did not immediately respond to Insider's request for comment on the deal.
In recent weeks, Wall Street activist investors have put pressure on Kohl's to sell or make stark changes to the company, according to previous reporting by Insider.
In a public letter to shareholders on Tuesday, activist investor Macellum Advisors – which owns a 5% stake in Kohl's – accused the retailer's executive team and board of directors of mismanagement and asked the company to make substantial changes or else sell the business.
"We firmly believe that without significantly more change to the Board, the Company will fail to deliver acceptable value creation in the years to come," the letter stated. "Absent more Board change, we believe the Board must pursue strategic alternatives."
While the company had largely been able to avoid the demise of peers like JCPenney and Sears that were particularly hard hit by the retail apocalypse, Kohl's performance began to falter during the pandemic.
"In our view, the business is falling short of its potential," GlobalData managing director Neil Saunders wrote in a note to clients in August.
Kohl's plans to share an updated financial plan and capital allocation strategy to improve its long-term profitability at the company's forthcoming "Investor Day" at the beginning of March.
source https://www.businessinsider.com/kohls-9-billion-bid-hedge-fund-starboard-value-group-report-2022-1