Kohl’s stock surged nearly 35% in midday trading Monday following reports that at least two different buyers are looking to take the retailer private.
On Friday, Kohl’s received an unsolicited $9 billion bid to go private from a consortium backed by activist investor Starboard Value LP, according to published sources.
Starboard offered to buy Kohl’s for $64 a share in cash, a roughly 37% premium from Friday’s closing price, The Wall Street Journal reported Friday and The New York Times reported Saturday.
Then, on Sunday, Bloomberg reported that private equity firm Sycamore Partners was also preparing to make an offer to buy Kohl’s.
In a statement Monday before the market opened, Kohl’s said it “has received letters expressing interest” in acquiring the company.
Kohl’s (KSS) board of directors “will determine the course of action that it believes is in the best interests of the Company and its shareholders,” it said. “Kohl’s (KSS) does not intend to further comment publicly on these matters unless it determines it is in the best interests of shareholders to do so.”
Kohl’s, which is facing pressure from Wall Street despite its relative strength in the battered department store sector, has been a target of various activist investors for months.
Last week hedge fund Macellum Advisors, which owns about 5% of Kohl’s stock, said in a letter that the retail chain’s board of directors and leadership team spent last year “materially mismanaging the business and failing to implement necessary” improvements.
Kohl’s responded in its own letter to Macellum that its strategy is “producing results,” including from its partnership with Sephora to open mini-beauty shops in stores and the addition of new athletic and casual clothing brands.
Other creative steps to draw in Kohl’s shoppers include partnering with Amazon to accept returns of Amazon purchases at its stores and leasing out space at a handful of locations to Planet Fitness (PLNT)and Aldi.
Before and during the pandemic, Kohl’s had been struggling: Sales stagnated from 2016 to 2019 and plunged 20% to $15 billion in 2020, with Covid-19 restrictions forcing many stores to close in the spring, summer and early fall.
But the chain rebounded in 2021. During its latest quarter ending October 30, sales at stores open for at least a year increased 14.7% compared with the same stretch in 2020.
Still, some on Wall Street believe Kohl’s is underperforming and are pressuring it to make changes or accept a buyout offer.