shares surged almost 32% on Monday following reports the retailer could be fielding takeover offers from two suitors.
The Wall Street Journal reported over the weekend that activist hedge fund Starboard Value was behind a group that made a $9 billion bid for Kohl’s (ticker: KSS), the department-store operator.
The bidding group was led by Starboard-backed Acacia Research, which told Kohl’s that it was assured by bankers that it could get financing for a bid that values the retailer at $64 a share.
Kohl’s was rising 31.9% to $61.78 on Monday.
Another potential offer is from Sycamore Partners, which has reached out to Kohl’s about a deal, Bloomberg reported, citing people familiar with the matter. It was unclear how much private-equity firm Sycamore is willing to pay for Kohl’s. Talks are preliminary and might not result in a transaction, the people told Bloomberg. CNBC also reported that Sycamore Partners was preparing to make a bid for Kohl’s.
Kohl’s confirmed Monday that it has “received letters expressing interest in acquiring” the company. It didn’t disclose who expressed interest.
“The Kohl’s Board of Directors will determine the course of action that it believes is in the best interests of the Company and its shareholders. Shareholders are not required to take any action at this time,” the company said in a statement.
Kohl’s added that it doesn’t intend to make any further public comment on these matters unless it determines it is in the best interests of shareholders to do so.”
The retailer has seen a surge of activist interest in recent months, as investors have grown disappointed by the lagging performance of its stock. Prior to Monday, the
SPDR S&P Retail ETF
(XRT) has gained 75% over the past two years, while Kohl’s shares have risen just 3%.
Activist investor Macellum Advisors last week again urged Kohl’s to take action to boost its stock price, saying the company’s board and executive leadership team “have spent another year materially mismanaging the business.”
Analysts at Citi said in a note Monday they believe Kohl’s was “using appropriate strategies to drive value” and added they believe the stock is a “mispriced asset.’
Kohl’s “is a strong [free cash flow] generator, and it doesn’t seem to be getting credit by the market, making it reasonable to consider offers,” Citi said. The firm has a 12-month price target on Kohl’s shares of $73 a share. Citi also reiterated its Buy rating on Kohl’s.
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