6th December 2022

A consortium backed by activist hedge fund Starboard Worth LP has provided roughly $9 billion to purchase division retailer Kohl’s Corp. KSS -2.60% , in accordance with folks conversant in the matter.

A bunch led by Acacia Analysis Corp., which Starboard controls, provided to purchase the department-store chain for $64 a share in money Friday, the folks mentioned. It instructed the corporate it has acquired assurances from bankers that it could be capable of get financing for the bid, the folks mentioned.

There are not any ensures that the group will in the end line up all of the funding wanted and make a agency supply or that Kohl’s can be receptive. Different suitors could emerge too.

Kohl’s shares closed at $46.84 Friday. The bid represents a 37% premium.

Based mostly in Menomonee Falls, Wis., Kohl’s has been underneath stress to spice up its share value, which rose early final 12 months however is little modified from roughly 20 years in the past. Two activist shareholders—Macellum Advisors GP LLC and Engine Capital LP—have lately known as on the corporate to discover promoting itself.

Kohl’s mentioned earlier this week that its technique is producing outcomes and that its board “recurrently works with specialised advisers to judge paths which have the potential to create long-term worth.” It mentioned it plans to unveil its strategic plans at an investor day in March.

Little-known Acacia has a market worth of simply $215 million, however the consortium instructed Kohl’s it acquired what is named a “extremely assured” letter from a financial institution asserting that it will likely be in a position to attain a debt-financing bundle for a portion of the bid, the folks mentioned. Whereas such letters are not any assure, they could be a significant vote of confidence.

Led by Chief Govt Jeff Smith, Starboard Worth is likely one of the most seen activist traders.

Photograph: Christopher Goodney/Bloomberg Information

Different particulars of the consortium’s proposal—and who’s within the group—couldn’t be decided. Reuters reported earlier this week that Acacia was exploring a attainable bid for Kohl’s.

Ought to it succeed, the group may intention to promote the corporate’s actual property to a different celebration, which may make pulling off the transaction simpler. Activists have proposed that Kohl’s discover sale-leasebacks of its actual property, which they’ve estimated could possibly be price $7 billion or extra.

Macellum mentioned in an open letter to Kohl’s shareholders Tuesday it has been pushing the corporate so as to add extra administrators with retail expertise or to rent bankers to discover a sale.

Earlier than Starboard invested within the agency and joined its board in 2019, Acacia was primarily a holding firm for patents. It now focuses on shopping for and enhancing firms. In October, it purchased privately held Printronix Holding Corp., a producer of line matrix printers, for $33 million, and it has made gives for different firms together with Comtech Telecommunications Corp.

Starboard, led by Chief Govt Jeff Smith, is likely one of the most seen activist traders. It holds seats on the boards of firms together with Papa John’s Worldwide Inc. and NortonLifeLock Inc.

Write to Cara Lombardo at cara.lombardo@wsj.com

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