Exclusive-Kohl’s braces for bidders revising down offers -sources -Breaking
© Reuters. FILE PHOTO: The Kohl’s label is seen on a shopping cart in a Kohl’s department store in the Brooklyn borough of New York, U.S., January 25, 2022. REUTERS/Brendan McDermid
By Svea Herbst-Bayliss
BOSTON (Reuters). – Bidders vying for Kohl’s Corp’s (NYSE:) acquisition are preparing lower binding bids than they made earlier in the year, according to people who are familiar with the matter. They want to adjust to the current market conditions and to the retailer’s deteriorating performance.
According to sources, Sycamore Partners and Franchise Group, a brand-holding firm, and J.C. Penney investors Simon Property Group Inc and Brookfield Asset Management Inc are the bidders. They plan to reduce their offers by 10% to 15%.
Acacia Research has also been mulling the next steps following its January offer of $64 per Share, which was rejected quickly by Acacia Value.
Sources say that some had expressed interest in Kohl’s share price of $62 over the past few days. Kohl’s shares trade for $36, down more than 40% this month, amid worries about rising inflation and lower consumer spending.
Some bidders indicated that they would be willing to pay higher prices earlier this year. Hudson’s Bay Company, a luxury department store operator (NYSE:), signaled its willingness to pay $70 per share.
According to data from Refinitiv, the company lowered its full-year earnings outlook and reported that its first quarter profit for 2022 was 11 cents. This is below analyst expectations of 70 cents.
Because the matter is confidential, sources asked for anonymity.
The bidders did not reply to our requests or declined to comment.
Spokesman for Kohl’s declined to comment. Last week, Kohl’s stated that potential buyers were informed about its process for submitting “actionable bids”.
According to sources, Kohl’s assured bidders that they will have sufficient time for their proposals in spite of the difficult financing environment. Sources said Oak Street Real Estate Capital, a real estate investment company, is likely to provide financing for the bidders.
Sources say that the best and last bids had been due by May 31st. Bidders may now get two additional weeks.
According to sources, Kohl’s substantial real estate holdings make an acquisition financially feasible. Sources say they could have a value of between $4 billion-$6 billion.
Kohl’s won a Board Challenge from Macellum Advisors two weeks ago. This hedge fund has been pushing for the company to be sold and believes that the management team has not done enough in order to improve sales.