Kohl’s shares surge on takeover offers from Acacia and Sycamore

Kohl’s Corp shares soared 33% before the bell on Monday after a Reuters report that private equity firm Sycamore Partners had approached the department store chain with a potential takeover offer of $9 billion.

A source said on Sunday Sycamore was willing to pay at least $65 per share, implying a 39% premium to the last closing price of Kohl’s shares. Starboard Value-backed Acacia Research had last week offered to pay $64 a share.

Kohl’s on Monday confirmed it had received letters expressing takeover interest, but did not name the suitors.

“The Kohl’s Board of Directors will determine the course of action that it believes is in the best interests of the company and its shareholders,” the department store chain said.

Activist investors, including Macellum Advisors and Engine Capital, have pressured Kohl’s to perform better for roughly a year and in recent weeks urged it to explore options, including a sale.

Like rivals Macy’s Inc and Nordstrom Inc, the company has lost market share to off-price and online chains, but its recent moves to partner with LVMH’s Sephora and PVH Corp’s Calvin Klein have earned plaudits from analysts.

Some analysts have said that Kohl’s, which has a market capitalization of $6.52 billion, could fetch a higher valuation than the current offers.

“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.

Kohl’s could warrant a per-share value of $70 to $80 based on the valuation of its retail operations, Credit Suisse analyst Michael Binetti said.

Kohl’s shares were on course for their best day ever, with the news also pushing up rivals Macy’s and Nordstrom between 5% and 7%.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Krishna Chandra Eluri and Aditya Soni)