A consortium backed by activist hedge fund Starboard Value LP has offered roughly $9 billion to buy department store
Kohl’s Corp.
KSS -2.60%
, according to people familiar with the matter.
A group led by Acacia Research Corp., which Starboard controls, offered to buy the department-store chain for $64 a share in cash Friday, the people said. It told the company it has received assurances from bankers that it would be able to get financing for the bid, the people said.
There are no guarantees that the group will ultimately line up all the funding needed and make a firm offer or that Kohl’s will be receptive. Other suitors may emerge too.
Kohl’s shares closed at $46.84 Friday. The bid represents a 37% premium.
Based in Menomonee Falls, Wis., Kohl’s has been under pressure to boost its share price, which rose early last year but is little changed from roughly two decades ago. Two activist shareholders—Macellum Advisors GP LLC and Engine Capital LP—have recently called on the company to explore selling itself.
Kohl’s said earlier this week that its strategy is producing results and that its board “regularly works with specialized advisers to evaluate paths that have the potential to create long-term value.” It said it plans to unveil its strategic plans at an investor day in March.
Little-known Acacia has a market value of just $215 million, but the consortium told Kohl’s it received what is known as a “highly confident” letter from a bank asserting that it will be able to attain a debt-financing package for a portion of the bid, the people said. While such letters are no guarantee, they can be a meaningful vote of confidence.
Led by Chief Executive Jeff Smith, Starboard Value is one of the most visible activist investors.
Photo:
Christopher Goodney/Bloomberg News
Other details of the consortium’s proposal—and who is in the group—couldn’t be determined. Reuters reported earlier this week that Acacia was exploring a possible bid for Kohl’s.
Should it succeed, the group could aim to sell the company’s real estate to another party, which could make pulling off the transaction easier. Activists have proposed that Kohl’s explore sale-leasebacks of its real estate, which they have estimated could be worth $7 billion or more.
Macellum said in an open letter to Kohl’s shareholders Tuesday it has been pushing the company to add additional directors with retail experience or to hire bankers to explore a sale.
Before Starboard invested in the firm and joined its board in 2019, Acacia was primarily a holding company for patents. It now focuses on buying and improving companies. In October, it bought privately held Printronix Holding Corp., a manufacturer of line matrix printers, for $33 million, and it has made offers for other companies including
Comtech Telecommunications Corp.
Starboard, led by Chief Executive
Jeff Smith,
is one of the most visible activist investors. It holds seats on the boards of companies including
Papa John’s International Inc.
and
NortonLifeLock Inc.
Write to Cara Lombardo at [email protected]
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