Franchise Group said in a statement that it had plans to contribute around $1 billion in capital to the deal, to be funded by increasing the amount of its secured lending facilities to match. The majority of the funding will be granted based on Kohl's real estate holdings, according to the Delaware, Ohio-based corporation.
After the close of regular trading on June 6, Kohl's shares, which had lost 15 percent this year, jumped about 15 percent to near $48. They had previously finished 1.5 percent higher at $42.12, giving the company a market capitalization of $5.4 billion. The Wall Street Journal has previously reported on the private negotiations.
"The purpose of the exclusive period is to allow FRG and its financing partners to finalize due diligence and financing arrangements and for the parties to complete the negotiation of binding documentation," Kohl's said.
Kohl’s, based in Menomonee Falls, Wisconsin, said in February it had rejected takeover offers for the company because they undervalued it and had engaged bankers to field additional interest in the company.
Both Sycamore Partners and a suitor backed by hedge fund Starboard Value LP had engaged with Kohl’s about a potential deal amid activist investor pressure to sell, Bloomberg News reported. While it was unclear how much Sycamore was willing to pay for Kohl’s, Acacia Research Corp., the Starboard-backed suitor, had offered $64 a share, or about $9 billion.
In May, activist investor Macellum Capital Management’s bid to overhaul the Kohl’s board was rejected by investors. Macellum contends that Kohl’s should sell its real estate assets or separate the e-commerce division if it’s unwilling to sell the full company.
(With agency inputs)
