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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
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 and
Nordstrom Inc, 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's Calvin Klein has earned plaudits
from analysts.
(Reporting by Praveen Paramasivam in Bengaluru; Editing by
Krishna Chandra Eluri)
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