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A source told Reuters that Sycamore was willing to pay at least $65 per share for Kohl’s, implying a 39% premium to last close. The news came two days after Acacia Research, backed by activist investment firm Starboard Value, offered to pay $64 a share.
Kohl’s could warrant a per-share value of between $70 and $80, based on the valuation of its retail operations, Credit Suisse (SIX:CSGN) analyst Michael Binetti wrote in a client note.
“KSS is a mispriced asset. KSS is a strong FCF (free cash flow) generator, and it doesn’t seem to be getting credit by the market, making it reasonable to consider offers,” Citi analyst Paul Lejuez said.
Reuters sources said Acacia and Starboard would likely work with Oak Street Real Estate Capital to try and sell off Kohl’s real estate holdings to raise additional capital for a deal. Kohl’s has been opposed to sale-leasebacks of its real estate.
J.P. Morgan analysts said Kohl’s real estate ownership stands at 35%, while brokerage Credit Suisse estimated total value of all of Kohl’s real estate at around $6.4 billion.
Kohl’s has a market capitalization of $6.52 billion, according to Refinitiv.
The chain has also been facing pressure from activist investors, including Macellum Advisors and Engine Capital, to perform better for roughly a year and their ongoing unhappiness has become more visible in the last weeks.
Kohl’s, like other department-store peers such as Macy’s Inc (NYSE:M) and Nordstrom Inc (NYSE:JWN), has been ceding market share to off-price chains and online-centric rivals, but its recent moves to partner with LVMH’s Sephora and PVH Corp (NYSE:PVH)’s Calvin Klein has earned plaudits from analysts.
