Kohl's stock (NYSE: KSS) rose 36% on Monday after the department store chain stated that it had received inquiries from potential purchasers.
The statement from Kohl's came after The Wall Street Journal reported on Friday that a group backed by activist hedge fund Starboard Value had offered to buy the retailer for approximately $9 billion, or $64 per share, in cash.
Kohl's is also being courted by a number of private equity firms, according to reports. Additionally, Sycamore Partners inquired about a potential acquisition of Kohl's, according to Bloomberg. On Monday, CNBC said that Sycamore Partners offered to buy the business for at least $65 per share.
Kohl's may be ready to sell its real estate portfolio in order to raise cash. They could choose to sell the properties that Kohl's locations take up and then rent them back. These "sale-leaseback" transactions may assist you in freeing up money that can be utilized to generate value.
The Takeaway
Activist investors have been pushing Kohl's to make adjustments to its plan or sell itself. For one thing, Macellum Advisors claims that Kohl's is "materially mismanaging the business." The hedge fund is asking that the business sell off its real estate holdings and use the cash to make share repurchases.
Kohl's responded to Macellum's allegations by pointing to the recent success of its retail and e-commerce locations. Increased sales combined with improving profit margins will assist in driving record EPS in 2021, according to the company.
Still, Kohl's is being challenged by discount rivals and e-commerce competitors, which may jeopardize its future success. Many investors, in turn, would want a purchase under any circumstances.
