Shares of Kohl’s Corp (NYSE: KSS) jumped nearly 35% on Monday after the American retail chain confirmed it had received takeover proposals from at least two private equity companies.
Kohl’s received a takeover proposal for $65 a share
New York-based Sycamore Partners wants to acquire Kohl’s at $65 a share that represents a 39% premium on where the stock closed on Friday. Activist investor Starboard Value-backed Acacia Research also proposed to buy the department store company for $64 a share over the weekend.
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The potential buyers might choose to shrink Kohl’s countrywide real estate footprint to raise capital, but the retailer is known to be against such a sale-leaseback agreement. In its statement, Kohl’s said:
The board of directors will determine the course of action that it believes is in the best interest of the company and its shareholders.
Sycamore and Acacia are yet to make an official comment on the news. Kohl’s is now trading at a PE multiple of 9.66.
The retailer could justify a valuation of over $70 a share
Credit Suisse’s Michael Binetti, on the other hand, says Kohl’s could justify $70 a share to $80 a share valuation, considering its widespread retail operations. In a note this morning, he wrote:
We do think there’s some merit to Kohl’s embracing a slightly more aggressive real estate strategy to bolster shareholder returns today.
The news comes shortly after the activist investor Macellum Advisors, which has a 5.0% stake in Kohl’s, said the company must shake up its board or consider a sale to boost its stock price. In response, however, Kohl’s had reiterated that its strategy was working, as evidenced by the growth in its Q3 sales and profitability.
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