Retailer Kohl’s is coming under increasing pressure on several fronts. On Thursday, activist investment firm Macellum Advisors, which has been fighting for more than a year for change at Kohl’s, sought to take control of the retailer’s board as part of its effort to persuade the company to sell.
Kohl’s recently received buyout offers but rejected them as too low. Last week, he said he hired investment bank PJT Partners and Goldman Sachs to take further interest. It also implemented a “poison pill” provision that makes it more difficult for an acquirer to make an offer directly to Kohl shareholders. He made an exception for “qualified” deals, which require deals to be fully funded, among other conditions.
In his push for a sale, Macellum said he was convinced “more than ever” that the retailer’s board needed a refresh – he offered a slate of 10 candidates. Macellum, which owns about 5% of Kohl’s stock, reached a settlement with the retailer in April that included adding three new directors to its 14-seat board. All members of Kohl’s board of directors, with the exception of its chief executive, Michelle Gass, are independent. The president, Frank Sica, is not a candidate for re-election to the board of directors.
Kohl called Macellum’s efforts to gain control of his board “unwarranted and counterproductive.”
Several potential suitors for Kohl’s have recently emerged:
Acacia Research, which is backed by activist investment firm Starboard Value, offered $9 billion last month, 37% more than Kohl’s market value at the time.
Private equity firm Sycamore Partners has also expressed interest in an offer.
Leonard Green & Partners, a private equity firm, contacted Kohl’s about a potential deal, first reported by the DealBook newsletter. The company, which has deep retail expertise, had previously attempted to lead a management buyout of Nordstrom.
Like most department stores, Kohl’s has struggled to fend off competition from online retailers and the brands themselves, who are increasingly avoiding department stores. He has worked to carve out a place for himself by focusing in part on sportswear, which accounts for more than a quarter of his sales.
Analysts have praised Kohl’s for creatively using its real estate, like partnerships with Amazon and Sephora, to rethink the profitability of its more than 1,000 stores. But they also warned of the potential impact of supply chain challenges on sales.
Kohl’s announced a 16% increase in quarterly revenue in November. Its shares are up more than 20% this year, fueled by takeover interest.