Activist investor: Kohl’s board “cannot ignore” market’s positive reaction to purchase offers

Retailer encouraged to explore sale

Organizations:

New York hedge fund and activist investor Macellum Capital Management is calling on Kohl’s Corp. to seriously consider selling the company, following a 36% spike in its share price yesterday.

The jump was in response to the retailer’s confirmation of takeover offers reportedly made by Acacia Research Corp., for $64 a share, and Sycamore Partners, for $65 a share. Kohl’s opened at $62.72 Tuesday, down from $63.71 at Monday’s close. 

In an open letter to Kohl’s board of directors Tuesday morning, Macellum pushed for a “credible and open process to evaluate a full sale of the company at an attractive premium.”

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Macellum, which owns a 5% stake in Kohl’s Corp., also asked for a seat on the retailer’s board, under the premise that its representative would lead a special committee of independent directors to oversee the review, retain advisors, and solicit proposals from potential suitors. The hedge fund was part of an activist investor group that attempted to take control of Kohl’s board last year. That effort resulted in three new board directors – two appointed by the group and one by Kohl’s.

Last week, Macellum placed renewed pressure on Kohl’s to improve its board and financial position, threatening to nominate a slate of independent board candidates for election at the 2022 annual meeting and asking Kohl’s to consider a sale. The firm noted that it suspects there are several “well-capitalized financial sponsors” interested in acquiring the company. 

Kohl’s responded, saying it was “disappointed with the path (Macellum has) taken and the unfounded speculation in their announcement and letter.”

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In its most recent letter, Macellum pointed to its original belief that Kohl’s could return to a higher value – at least $100 per share – with a new board, improved strategy and optimized balance sheet, but said exploring a sale is the best option for shareholders right now. 

“In our view, the board cannot ignore yesterday’s approximately 35% spike in the company’s share price and try to chill acquirers’ interest,” according to the letter. 

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