NEW YORK -- Kohl's confirmed that it has been approached about a possible sale of the department store chain, sending shares up more than 30% Monday.
The company said that it would not comment further, but its confirmation follows media reports that the private equity firm Sycamore Partners had approached Kohl's about a potential deal. Days earlier, an investment consortium called Acacia Research, backed by activist hedge fund Starboard Value LP, reportedly bid $64 per share, or about $9 billion
Kohl's Corp., based in Menomonee Falls, Wis., said Monday that its board is reviewing the offers. A spokesman at Sycamore declined to comment, while Acacia couldn't immediately be reached for comment.
The reported offers come just a week after activist hedge fund Macellum Advisors released a letter urging Kohl's to explore strategic options, including a sale, if the chain doesn't take action to improve its business and increase its stock price. The investor said it planned to nominate a slate of director candidates at Kohl's shareholders meeting this year, unless Kohl's decides to embrace some changes.
In April 2021, Kohl's announced it was adding three independent members to its board of directors as part of an agreement it struck with a key activist investor group that included Macellum. In addition to Macellum, the group also included Ancora Holdings, Legion Partners Asset Management and 4010 Capital.
Shares of Kohl's rose 36% or $16.90 to $63.71 Monday.
The Acacia Research offer highlights the resurgent interest that activist investors are showing in department stores, as storefront retailers have struggled with supply chain issues in the pandemic and increasing competition from online sites. Shares of retailers have been under pressure for the past several years, while those of online sites have, until recently, been soaring.
The quick procession of Macellum's letter and the Acacia Research offer may be the beginning of a dance to put pressure on Kohl's to consider a sale -- or otherwise quickly raise its share price. In response to Macellum's letter, Kohl's said last week that it was confident in its board and would "aggressively pursue the best interests of all shareholders."
Kohl's, founded in 1962, is a department store focused on casualwear, home wares and sporting goods. Unlike other retailers such as Nordstrom, Kohl's stores are frequently found in smaller shopping centers, rather than malls. That has made its real estate more valuable as malls have fallen on hard times.
A key question will be whether the Acacia research consortium will secure the necessary funds to finance the bid, particularly given challenges posed by past leveraged buyouts of retailers, such as Toys R Us, Payless and Neiman Marcus. Those deals saddled the retailers with debt, leaving them unable to make the necessary investments as e-commerce transformed the retail landscape. All three were eventually unable to make their loan payments and filed for bankruptcy. Both Neiman Marcus and Payless emerged from bankruptcy, while Toys R Us ultimately liquidated.
Kohl's has argued that its efforts to invest in its online and activewear business are underway -- and getting traction. In November, it reported that its third-quarter sales had jumped 16%. In December 2020, it announced a partnership with Sephora to help draw more shoppers to its stores. Its activewear business, which it is working to make more inclusive to all sizes, now makes up a little more than one-quarter of its sales.
Information for this article was contributed by Anne D'Innocenzio of The Associated Press and by Lauren Hirsch of The New York Times.