Following rumours that the store may be receiving takeover approaches from two parties, shares jumped more than 28% in premarket trade on Monday.
The Wall Street Journal revealed over the weekend that activist hedge fund Starboard Value was behind a $9 billion proposal for department store operator Kohl’s (ticker: KSS).
Acacia Research, which is funded by Starboard, told Kohl’s that bankers convinced it that it could acquire funding for an offer that valued the retailer at $64 per share.
In premarket trade on Monday, Kohl’s was up 28.7% to $60.27.
Another possible offer comes from Sycamore Partners, which has approached Kohl’s about a transaction, according to Bloomberg, citing sources familiar with the situation. It’s unknown how much Sycamore Capital, a private equity group, is willing to spend for Kohl’s. According to Bloomberg, the talks are preliminary and may not result in a purchase. Sycamore Partners was reportedly planning a bid for Kohl’s, according to CNBC.
Activist interest in the company has increased in recent months, as investors have become dissatisfied with the stock’s sluggish performance. The
Over the last two years, the SPDR S&P Retail ETF (XRT) has gained 75%, whereas Kohl’s stock has only grown 3%.
Macellum Advisors, an activist investor, pushed Kohl’s last week to take action to increase its stock price, claiming the company’s board and executive leadership team “had spent another year fundamentally mismanaging the business.”
In a note released Monday, Citi analysts stated that Kohl’s is “applying suitable techniques to drive value” and that the company is a “mispriced asset.”
“Kohl’s is a good [free cash flow] generator, and it doesn’t appear to be getting credit from the market,” Citi said, adding that it’s “logical to explore bids.” Kohl’s shares have a 12-month price objective of $73 per share, according to the business. Kohl’s was also given a Buy rating by Citi.