Kohl's, Franchise Group enter exclusive negotiations over sale
The proposed $60 per share sale price would value Kohl's at about $8 billion
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Kohl's announced Monday that it has entered exclusive talks with retail store operator Franchise Group, which has offered to purchase the department store chain for $60 per share, a proposal that values the company at about $8 billion.
Stocks closed Monday with Kohl’s shares at $42.12, and the company's market value ended the day at about $5.4 billion.
U.S. department store Kohl's Corp. (iStock / iStock)
Franchise Group is collaborating with Oak Street Real Estate Capital to finance the potential agreement, according to CNBC.
"The Kohl’s Board of Directors has entered into exclusive negotiations with Franchise Group, Inc. ("FRG"), a holding company of a collection of market-leading and emerging brands, for a period of three weeks in relation to FRG’s proposal to acquire the Company for $60.00 per share," Kohl's said in a press release.
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"The purpose of the exclusive period is to allow FRG and its financing partners to finalize due diligence and financing arrangements and for the parties to complete the negotiation of binding documentation," the release continued.
The deal is subject to approvals of the boards of directors for both companies, and there is no guarantee that an agreement will be reached.
"Kohl’s Board of Directors remains focused on selecting the path that maximizes value for all Kohl’s shareholders," the release stated.
Several bidders, including private-equity firm Sycamore Partners and J.C. Penney investors Simon Property Group Inc and Brookfield Asset Management Inc had submitted competing offers for Kohl's recently.
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The sign outside a Kohl's store is seen in Broomfield, Colorado February 27, 2014. (REUTERS/Rick Wilking) (Reuters Photos)
The department store chain has been pressured to consider selling the company since December 2021, when hedge fund Engine Capital recommended a sale or another alternative to increase its stock price. Kohl’s shares were trading around $48.45 at the time.
Hedge fund Macellum Advisors in mid-January then called on Kohl’s to consider a sale. Macellum CEO Jonathan Duskin said executives were "materially mismanaging" the company and that it had ample potential to unlock with its real estate.
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A sign marks a Kohl's store in Medford, Massachusetts, U.S., February 21, 2017. (REUTERS/Brian Snyder) (Reuters Photos)
Kohl's shares reached a 52-week high of $64.38 in late January.
And in February, Kohl’s revealed it had brought on bankers from Goldman Sachs and PJT Partners to help evaluate proposals.
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Kohl’s reported last month that for the three-month period ending on April 30, its sales dropped to $3.72 billion from $3.89 billion last year.
Reuters contributed to this report.