June 30, 2022

Kohl's, Franchise Group Enters Exclusive Negotiations for Sale

Kohl’s, Franchise Group Enters Exclusive Negotiations for Sale

Kohl’s announced Monday that it has entered into exclusive talks with retailer operator Franchise Group, which has offered to buy retail chain for $60 per share, a proposal that values ​​the company at about $8 billion.

Stocks closed on Monday with Kohl stock at $42.12And the company’s market value ended today at about $5.4 billion.

Kohl’s Corp. Store (iStock / iStock)

The Franchise Group is teaming up with Oak Street Real Estate Capital to fund the potential agreement, according to CNBC.

“The Kohl Board of Directors has entered into exclusive negotiations with Franchise Group, Inc. (“FRG”), a holding company for a group of leading and emerging market brands, for a period of three weeks regarding FRG’s proposal to acquire the Company for $60.00 per share.” Cole said in a press release.

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“The purpose of the exclusivity period is to allow FRG and its funding partners to finalize their due diligence and funding arrangements and for the parties to complete negotiations on binding documents,” the statement continued.

The deal is subject to approval by both companies’ boards of directors, and there is no guarantee that an agreement will be reached.

“The Kohl Board of Directors remains focused on choosing the path that maximizes value for all of Kohl’s shareholders,” the statement read.

Several bidders, including private equity firm Sycamore Partners and JC Penney investors Simon Property Group Inc and Brookfield Asset Management Inc, have submitted bids to compete with Kohl’s recently.

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A sign outside a Cole store in Broomfield, Colorado, February 27, 2014 (REUTERS/Rick Wilking) (Reuters Photo)

The department store chain has been under pressure to consider selling the company since December 2021, when hedge fund Engine Capital recommended a sale or other alternative to the increase in its share price. Kohl’s shares were trading around $48.45 at the time.

Then hedge fund Macellum Advisors in mid-January called on Kohl’s to consider selling. Jonathan Doskin, Macellum’s CEO, said executives were “materially mismanaging” the company and that it had great potential to unlock through its real estate.

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A sign indicates Kohl’s store in Medford, Massachusetts, US, February 21, 2017. (REUTERS/Brian Snyder) (Reuters Photo)

Kohl’s shares reached a 52-week high of $64.38 in late January.

And in February, Kohl’s revealed it had hired bankers from Goldman Sachs and PJT Partners to help evaluate the offers.

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Kohl’s reported last month that for the three-month period ending April 30, Its sales fell to $3.72 billion From $3.89 billion last year.

Reuters contributed to this report.