Kohl's jumps on report bidders may be willing to pay as much as $62/share

Justin Sullivan/Getty Images News

Kohl's Corp. (NYSE:KSS) soared 13% on a report that potential bidders are planning to make binding offers that are lower than their original bids for the department store chain. Some bidders indicated they may be willing to make offers for much as $62/share, according to a Reuters report.

Sycamore Partners, Franchise Group (FRG) and Simon Property (SPG) and Brookfield Asset Management (BAM) plan to make offers that are at least 10% to 15% below their original bids, according to Reuters. Starboard Value-backed Acacia Research (ACTG) is also evaluating its options after making a $64/share offer in January that was rejected.

Real estate firm Oak Street Real Estate Capital is expected to offer financing for potential buyers, according to the Reuters report. Best and final offers were originally due at the end of the month, though bidders may now have an additional two weeks.

The Reuters report appears to refute a CNBC item from Friday that the main potential bidders for KSS are said to be on the sidelines because they are having trouble getting financing for a deal. A deal can't get financing in the $60s/share. The lenders are said to not have confidence in Kohl's numbers after company reported its Q1 results last Thursday.

The CNBC report followed a NY Post item late Thursday that the department store chain's Q1 results may dissuade potential suitors from making offers.

Kohl's last Thursday said it expected “fully-financed final bids to be submitted in the coming weeks.” The activist pushing for the company to sell itself was dealt a blow earlier this month when Kohl's holders rejected all of Macellum's 10 board nominees.

Earlier Wednesday Kohl's outlined new store strategies including more Sephora, smaller units.

Comments

[Happyfingers]

At 40.48...I would gladly take 62.00

[joezapp]

@Happyfingers That's exactly what the buyers are hoping for...weak hands in a general stock market downturn. The best offer should be over $64, which is the offer that was already rejected.

[ithinking]

The Fed has printed trillions and the banks have to repo everyday to the Fed. All assets, junk or not, are priced in this artificial level. The Kohl's near me is basically an Amazon's return station instead of a clothing store, almost no one inside.

[joezapp]

The best offer will likely be over $64. That doesn't mean it gets done, though.

[OverTheHorizon]

$62? In your dreams. No deal here.

[abracadabra75]

they will definitely lose a LOT of money on that one.

[I_Am_The_Walrus]

Step 1: Pump
Step 2: Dump

[sd55]

Has anyone, contributors or readers, kept a list of the bidder names and their bid(s), regardless of whether they stated firm financing?

There is much discussion about KSS worth. As far as I know there were no bid(s) from any interested party greater than $69. Yes everyone likes a bargain but these bidders are not stupid in that there is risk involved when buying an existing business with the expectation the business will continue to be a going-concern.

[kruncher]

@sd55 Perhaps you could look at RRD bidding (sold to private investors months ago). It started at ~$7.50, went to over $11.50 or so and I don't remember what happened as I sold at $10.50 not knowing what was real or not. Alot like Kohl's.

[sd55]

@kruncher I read a contributor's article last week that stated he sold his KSS position at $65/share since no bidders' offer was greater than $68-$69. I believe his logic was that based on the offers presented KSS was not likely to be sold for a greater price as there was no fierce competitors willing to outbid each other, and he was comfortable with his gain to invest $$$ in others that fit his portfolio. I'm chomping at the bit to do the same despite my 4% dividend yield.

[kruncher]

@sd55 You know, I've been evaluating my own strategies and I've determined I may have dropped the ball. The issue is fear of missing out, so one holds in anticipation of a better price. I internally always believed to hedge your bets. Meaning, perhaps sell half or some other % of your position to lock in a sure gain. I don't do this nearly enough and realized I made at least 4 technical errors in the recent 1.5 years that have resulted in considerable loss in profits (and even real losses) if I had only sold part of my positions (better in some cases if I sold all, but I have difficulty with that). However, if Kohl's got an $85 offer the regret is almost untenable for all but the most disciplined of us. That's the difference between a great investor and merely a rather poor one (it's the discipline and not having regrets).

[Jamjack]

Give the auctioneer a throat cough drop and let the bidding auction begin....LOL....We will see what happens.

[ImpatientValueInvestor]

Management should not sell unless it is significantly above this BS $62 figure. They make a billion every year, use that to buy back shares every year they will be way above $62 in no time.

[Jamjack]

62 acceptance would disappoint me, but still yields gain.

[ImpatientValueInvestor]

@Jamjack I will begrudgingly put a lot of money in my pocket.

[UILoutsider]

@ImpatientValueInvestor What year are you talking about? Kohls after tax Net Income for past 4 fiscal years has been:
2021: 938,000 million
2020: -163,000 million
2019: 691,000 million
2018: 801,000 million

At approximately $20 billion annually in sales, to have a bottom line annual profit of 4% or less is not top quartile performance in class.
Management would absolutely pull the trigger at $62/share; that would return a ton of value to the shareholders that current management will not attain through current strategies. Also benefits management as it would activate all the golden parachute CIC provisions in their employment agreements.

[kruncher]

If the company was worth $69 before, not much should change as performance is fluid. It's like buying a house for $500,000 (thinking it's a great buy) from a builder just to find out that 3 months later he's selling the same model for $410,000 (this is a real scenario by the way) because the then current market demand has changed or interest rates is spiking, etc. The $500,000 buyer feels cheated (however, if builder had increased the price to $540,000 you'd feel great). In my own home, 6 months after paying $650,000 Zillow says estimated market value $480,000. Today the sales on my street are over $1.1 million. I really didn't care as I liked the house and know things go up and down. With Kohl's, other than finance cost issues, if worth $69 before, they are trying to take advantage of the current fear!

[Clark158f1]

@kruncher

All true but the market has now made is cheaper because of the concerns about retailers.

The buyers will be getting a deal @ $ 60 unless the board screws it up again.

[kruncher]

@Clark158f1 Perhaps, however the market was considered toast just 2 years ago when Kohl's went under $12 and most thought the ballgame's over. Things could change once again or then again not!

[moreno7676]

@kruncher I get the logic but the market has signaled multiple times that the current management’s plan is not good enough. Kss may have been worth 69 a couple months back but a lot has changed and the board owes the shareholders to do the right thing and sell

[UILoutsider]

Dead cat bounce.

[Income4ever aka Cyclenut]

Not sure why Simon is interested in Kohls...

[Clark158f1]

@Income4ever aka Cyclenut

Its an anchor tenant in many of their malls. If they can buy it cheap enough and make the improvements necessary to boost profits its a strategic investment for them.

[Income4ever aka Cyclenut]

@Clark158f1
Intresting ....

[Happyfingers]

@Income4ever aka Cyclenut They are NOT

[elwalle]

Musk strikes again !!!

[Clark158f1]

I now expect a deal to get done at $ 60

[KimBEAV]

Why would anyone pay so much....

[William Cikos]

@KimBEAV The PEG is below 1 right now. Bidders understand they'd have to pay a substantial premium for the Board to accept any offer.

[sd55]

Where do I sign up for this sale? Can I get a "next in line number" to be served!?

[JackCr]

$85.00 or bust!

[SivBum]

Joins TWTR's shaky buyout offer from Musk.

[Jamjack]

I don't think the two are comparable. Twitter fake accounts doesn't compare as there are no such thing as fake shoppers spending money. How much real estate does Twitter own?