Kohl’s has rejected a 9 billion dollar takeover by an activist group for being too low, and said they will review other potential offers for the department-store chain. The company has also adopted a shareholder rights plan, better known as a poison pill, that will hinder any activist groups from acquiring more than 10 percent of the company. The plan will be in effect for a year as Kohl’s reviews offers.
Kohl’s said the 9 billion dollar offer didn’t reflect the company’s value or its future growth and cash flow generation. The company’s board of directors has designated its finance committee to review other offers of interest. Kohl’s has also engaged financial advisors, including Goldman Sachs and PJT partners, and has asked Goldman Sachs to engage with interested parties.
“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,” said Kohl’s chairman Frank Sica. “The board is committed to acting in the best interest of shareholders and will continue to closely evaluate any opportunities to create value.”
Jonathan Duskin, a managing partner of Macellum Advisors GP LLC, which owns 5 percent of Kohl’s outstanding shares, has pushed the company to consider a sale. He told the Wall Street Journal he was disappointed by Kohl’s rejecting the deal and questioned if a group backed by Starboard Value LP, an activist hedge fund, was given access to information that would have allowed it to beef up its offer.
“This morning’s rejections—which come just two weeks after outreach from potential acquirers—only validates for us that a majority of the board is entrenched and lacks objectivity when it comes to evaluating value-maximizing sale opportunities relative to management’s historically ineffective stand-alone plans,” Duskin said to the Wall Street Journal.
Kohl’s will announce a shareholder update on Kohl’s Investor Day on March 7. The company’s shares were up 1.88 percent on Friday to 59 dollars and 68 cents.