BY Richard Summerfield
Following a strategic review, department store chain Kohl’s Corp has announced that it has decided against selling itself to the Franchise Group.
According to a statement from Kohl’s announcing the decision, the company’s board and management team remain committed to creating value for shareholders and are exploring further opportunities in the near and long term. Kohl’s board also reaffirmed its commitment to executing a $500m accelerated share repurchase programme, to commence immediately following the company’s Q2 earnings results. This programme is part of Kohl’s previously announced $3bn share repurchase authorisation.
The company also confirmed that its board also currently reviewing other opportunities to unlock shareholder value, including re-evaluating monetisation opportunities for portions of the company’s real estate portfolio.
“Throughout this process, the board has been committed to a deep and comprehensive review of strategic alternatives with the goal of selecting the path that maximizes value for shareholders," said Peter Boneparth, chair of the board at Kohl’s. “After engaging with more than 25 parties in an exhaustive process, FRG emerged as the top bidder and we entered into exclusive negotiations and facilitated further due diligence. Despite a concerted effort on both sides, the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement. Given the environment and market volatility, the Board determined that it simply was not prudent to continue pursuing a deal.”
He continued: “As always, the Board remains open to all opportunities to maximize value for shareholders, and we look forward to actively engaging with our shareholders as we move forward to ensure we are considering their perspectives in our plans. Kohl’s is a financially strong Company that generates substantial free cash flow and has a clear plan to enhance its competitive position and improve performance over the long term. Highlighting the Board’s confidence in the Company’s strategic plan, the Board reaffirms its commitment to an accelerated share repurchase program following the Company’s Q2 earnings results announcement.”
In June, the companies announced they had entered an exclusive three-week negotiation period, with Franchise Group expected to acquire Kohl’s in an all-cash deal worth $60 per Kohl’s share held, valuing the company at around $8bn. The bid of $60 per share constituted a premium of around 42.5 percent to Kohl’s closing price on the last day of trading before the deal was announced.
Kohl’s has faced significant activist unrest in recent months, with activist investors pressing for the sale of the company and a shakeup of the board.
Kohl’s recently lowered its profit-and-revenue forecasts for the full year, which is also believed to have further complicated the potential deal with Franchise Group. Kohl’s sales for the three-month period to 30 April 2022 fell to $3.72bn from $3.89bn in 2021.
News: Kohl's abandons talks to sell itself to Franchise Group