Kohl's braces for bidders revising down offers -sources

Acacia Research

25/05/2022 15:03

By Svea Herbst-Bayliss
    BOSTON, May 25 (Reuters) - Bidders competing to acquire
Kohl's Corp  KSS.N  are preparing to make binding offers that
are lower than the indicative bids they submitted earlier this
year to reflect the market downturn and the U.S. retailer's
deteriorating business, people familiar with the matter said. 
    The bidders, which include private equity firm Sycamore
Partners, brand holding firm Franchise Group, and J.C. Penney
investors Simon Property Group Inc  SPG.N  and Brookfield Asset
Management Inc  BAMa.TO , plan to lower their offers by at least
10% to 15%, the sources said.
    Starboard Value-backed Acacia Research is also mulling next
steps after its bid of $64 a share, made in January, was quickly
rejected by the company as being too low. 
    Some of them had indicated in recent days they were willing
to pay as much as $62 per share for Kohl's, according to the
sources. Kohl's shares are currently trading around $36, having
lost more than 40% of their value this month amid concerns that
raging inflation and lower consumer spending will weigh on its
business prospects.
    Earlier this year some bidders had indicated they were
willing to pay a higher price, with luxury department store
operator Hudson's Bay Company signaling it was willing to pay at
least $70 a share.
    The company cut its full-year earnings forecast last week
and said its profit in the first quarter of 2022 fell to 11
cents per share, missing analyst estimates averaging 70 cents,
according to Refinitiv data.  urn:newsml:reuters.com:*:nL3N2XB1YU
    The sources requested anonymity because the matter is
confidential.
    The bidders either declined to comment or did not respond to
requests for comment.
    A Kohl's spokesman declined to comment. The company said on
its earnings call last week that it has informed potential
buyers about the process of submitting "actionable" bids.
    Bidders have been assured by Kohl's they would have enough
time to prepare their offers given the challenging financing
environment, the sources said. Real estate investment firm Oak
Street Real Estate Capital is expected to offer financing to the
bidders, the sources added.
    Best and final bids were originally due at the end of May
and now bidders might get an additional two weeks, according to
the sources.
    Kohl's sizable real estate holdings, which analysts have
said could be worth between $4 billion and $6 billion, make an
acquisition financeable, the sources said. 
    Two weeks ago, Kohl's fended off a board challenge from
hedge fund Macellum Advisors, which has been pushing the company
to sell itself, arguing management has not done enough to boost
sales and improve the business.

 (Reporting by Svea Herbst-Bayliss in Boston; editing by David
Evans)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))