Kohl faces renewed pressure as Sycamore expresses interest after Acacia bid

A sign marks a Kohl's store in Medford

© Reuters/Brian Snyder
A sign marks a Kohl’s store in Medford

By Svea Herbst-Bayliss

(Reuters) – US department store Kohl’s Corp could soon face a second takeover bid as private equity firm Sycamore Partners prepares to launch a bid just days after a consortium backed by activist investment firm Starboard Value , has proposed to buy the company, three sources familiar with the matter said on Sunday.

Sycamore Partners has contacted Kohl’s about a potential bid that the company would value at around $9 billion, a source said. The firm is willing to pay at least $65 per share in cash for the company, the source said.

The news comes two days after Acacia Research, backed by Starboard, offered to pay $64 a share for Kohl’s, confirming a Reuters report last week that Acacia had reached out to the company about its bid to express interest in acquisition.

There are no guarantees that Sycamore Partners will make an offer or that an agreement will be reached with either Sycamore or Acacia, the sources said. Bloomberg first reported Sycamore’s interest on Sunday, and the Wall Street Journal reported Acacia’s offer on Friday.

Sycamore, Acacia and Kohl’s representatives did not immediately respond to requests for comment.

Sycamore’s interest in Kohl’s demonstrates continued investor interest in retailers and the issues brick-and-mortar retailers are facing as the pandemic has largely prompted shoppers to shift their shopping habits in favor of online retailers.

Kohl’s has been under pressure from activist investors to do better for about a year, and their continued dissatisfaction has become more apparent in recent weeks after the company’s share price rose just 5% over the past year.

Last week, activist investment firm Macellum Advisors, which owns 5% of Kohl’s shares, urged the company to explore strategic options, including a sale, and warned that it plans to appoint directors to its board. Also late last year, activist firm Engine Capital said it wanted Kohl’s to consider selling it.

Macellum’s new push comes less than a year after it reached an agreement with two other activists that saw Kohl’s add three new directors to the board. Macellum called 2021 “another lost year” at Kohl and slammed the 22% drop in the share price from April to last week.

Kohl’s said last week its “strategy is delivering results” and that management and the board “reluctd to be distracted” from delivering stronger results for all investors.

Sources said Acacia and Starboard, one of the industry’s most respected and busy activist investors, are likely working with Oak Street Real Estate Capital to try to sell Kohl’s real estate holdings and raise additional capital for a transaction. Kohl’s has historically opposed sale-leasebacks of its properties.

(Reporting by Svea Herbst-Bayliss in Boston and Jaiveer Singh Shekhawat in Bengaluru; Additional reporting by Bhargav Acharya; Editing by Andrea Ricci and Chris Reese)

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