According to Bloomberg News, people familiar with the ongoing offering say that a group that starboard Value LP backs are offering to the retailer, Kohl’s Corp, as much as $ 9 billion.
Acacia Research Corp, which the Clifford Press runs has led the offer and gets stakes in many firms with the intention of ownership. If they buy Kohl’s, it would be the company’s largest acquisition till now. As stated by the people, Acacia, which Starboard backs financially, currently enjoys less than a 5% stake in the store chain department. The company has made offers in the past to purchase Comtech Telecommunications Corp. and Spok Holdings.
Private equity deals have grown as more and more investors are building up huge cash reserves. By mid-last year, this sector has already accrued a record $3.3 trillion of capital that was unspent, which also included $ 1 trillion held by the buyout funds, thereby offering substantial firepower.
Retailers have been trying for takeover, with UK’s two biggest grocers, Morrison’s and Asda were bought last year using backing from private equity. Dow Jones reported earlier about the planned acquisition. However, Kohl’s did not want to comment on the same.
The bid comes amidst a scenario when the management of Kohl’s is facing wrath from Macellum Advisors, the activist investor that has been encouraging Kohl’s to make changes in the board or considering a sale that was mentioned in a letter to the stakeholders of late.
Bloomberg News also reports that Macellum was forcing Kohl’s to appoint a few executives, thereby seeking to control the firm. Since then Kohl’s shares have tumbled by 20%.
The Acacia-led group made an offer of $64 per share in cash, as stated by two people aware of the matter and requested confidentiality. This figure is a 37% premium to this chain of department stores closing Friday. Jefferies Financial Group Inc is advising Acacia to make the purchase deal. However, Kohl’s did not want to comment on the deal. Shares of Acacia dropped Friday by 0.7% to close at $4.34, which was recorded to be the lowest in a year. Shares of Kohl’s dropped 2.6% to $46.84.
Management of Kohl’s aims at fostering foot traffic and sales at the stores through partnerships in conjunction with more retailers, and among them is e-commerce giant, Amazon.com Inc. Kohl’s has pinned its hopes high on athletic-leisure wear and stated that it wants to make athletic wear at least 30% of its business. The fact that Kohl’s has many off-mall locations, allows it to enjoy a competitive edge over other department store chains.
