It's good to be wanted, but not great when the people who want to buy you see your value as below where you see it. That's the situation facing Kohl's (KSS) board of directors as it deals with unsolicited offers for the company.
Essentially, Kohl's thinks it's worth more than any of the buyers have offered and, when you have multiple offers, it's generally smart to ask for more.
Now, the company's board has gone on the offensive, with the retailer saying that expressions of interest it has received undervalue it. To prevent a hostile takeover attempt, the company's board has adopted a poison pill anti-takeover measure.
Such measures are designed to make hostile takeovers prohibitively expensive.
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Kohl's: Bids Inadequate Given Growth Prospects
The board and its financial advisors have reviewed the proposals that the Menomonee Falls, Wis., retailer has received. Those proposals "do not adequately reflect the company's value in light of its future growth and cash flow generation," the company said in a statement.
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"The board is committed to maximizing the long-term value of the company and will review and pursue opportunities that it believes would credibly lead to value consistent with its performance and future opportunities."
"We have a high degree of confidence in Kohl's' transformational strategy and we expect that its continued execution will result in significant value creation," Chairman Frank Sica said. The board "will continue to closely evaluate any opportunities to create value."
Kohl's' board tasked the finance committee, which is composed entirely of independent directors, to lead the review of any expressions of interest.
The retailer and the board have also retained financial advisers, including the New York investment banks Goldman Sachs and PJT Partners. Goldman will engage with interested parties, the company said.
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Kohl's Has Some Serious Bidders
The Wall Street Journal earlier reported that a firm controlled by the activist hedge fund Starboard Value had proposed to acquire Kohl's for $64 a share. That Starboard Value affiliate, Acacia, confirmed that proposal, media reports say.
Bloomberg has reported that Sycamore Partners offered Kohl's a deal. The price Sycamore was discussing was unclear, that report said.
Late last year Kohl's also faced pressure from activist hedge fund Engine Capital LP, which asked management to consider selling or separating its e-commerce division, arguing in a letter to Kohl's management it could be valued as high as $12.4 billion.
The New York investment manager Jana Partners last October said that Macy's could double its value if it separated out its e-commerce operations. (M)
Kohl's in its statement did not specify the suitors to which it was referring.
The department-store retailer plans to update investors and analysts on its strategy and capital-allocation plans at an Investor Day presentation on March 7.
Beyond the activists, traditional retail is dodging competition from online retail while it tries to placate inflation-bitten consumers continuously looking for the best deals.
And it is operating with a pandemic-slammed supply chain that at any given moment might or might not provide exactly the products that their customers want most.
