Kohl’s Stock Soars On Bidding Action

Kohl’s did not specify who the bidders were, though Reuters and The Wall Street Journal reported over the weekend that a group led by activist hedge fund Starboard Value put in a bid of $64 a share, or $9 billion, and had the financing for a deal. Other media reports that followed indicated that Starboard and Sycamore Partners were also bidders.

Kohl’s has hired Goldman Sachs to “look at the bids and run a process,” said the source. “They’ll put a book together, set up a data room, if they haven’t already, and assess the bids. Now it’s officially out of management’s hands. It’s up to the board which has to take these offers seriously, and there’s a chance if it rejects them, they can be sued,” said the source, who added that typically, a mergers and acquisitions process takes a couple of months.

“A transaction may realize value for shareholders more quickly than Kohl’s as a stand-alone public company,” Cowen reported. “Kohl’s board will need to evaluate all value maximization opportunities for shareholders.” But Cowen also expressed confidence in Kohl’s management, stating, “We believe management is on the right track given agile strategies including the Sephora partnership, continued focus on the active segment and new brand rejuvenation, particularly in women’s apparel.

Kohl’s for months has been under pressure from activist shareholders to change its board composition, pursue strategic alternatives including possibly selling the company or cashing in on its real estate holdings, improve its performance and increase value for shareholders. Engine Capital LP, which owns approximately one percent of Kohl’s, last week urged Kohl’s to conduct a review of strategic alternatives, and on Monday followed up with a letter to the Kohl’s board, signed by Arnaud Ajdler, managing partner, and Brad Favreau, partner, stating, “Over the weekend, we read with interest multiple press reports stating that a Starboard-led consortium has offered $64 per share in cash for Kohl’s.

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