Kohl’s says takeover offers undervalue its business, initiates ‘poison pill’

Kohl’s said Friday it believes recent takeover offers undervalue its business in light of future growth and cash flow generation, following a review by independent financial advisors.

The department store also said it has adopted a shareholder rights plan, otherwise known as a “poison pill,” in order to avert a hostile takeover. The plan is effective immediately and expires in February 2023.

Kohl’s shares were falling less than 2% in premarket trading. The stock has surged in recent weeks, on the news of potential suitors, but remain below a 52-week high of $64.80 last May.

“The valuations indicated in the current expressions of interest which it has received do not adequately reflect the company’s value in light of its future growth and cash flow generation,” Kohl’s said in a statement.

Last month, Acacia Research, backed by activist investment firm Starboard Value, offered to pay $64 a share for Kohl’s, valuing it at about $9 billion. Private equity firm Sycamore Partners was also planning an offer of $65 a share, people familiar with the offer told CNBC.

Activist hedge fund Macellum Advisors has, meanwhile, been asking Kohl’s to consider selling itself and wants at least one seat on the retailer’s board.

Cowen & Co. analyst Oliver Chen had previously said the per-share offers of $64 and $65 were not enough, especially when considering the underlying value of Kohl’s real estate. Chen said last month that he estimated Kohl’s stores could be sold for anywhere from $10 million to $14 million apiece, depending on location and traffic. However, Kohl’s has been resistant to doing any additional sale-leaseback transactions.

Kohl’s said Friday that its board is committed to maximizing long-term shareholder value and will review and pursue opportunities that Kohl’s believes will “credibly lead to value consistent with its performance and future opportunities.”

It added that it has a designated finance committee, comprised exclusively of independent directors, to lead an ongoing review of any future expressions of interest in the company. It is also working with Goldman Sachs and PJT Partners on those efforts.

Kohl’s said it will provide more updates on its strategy during an investor day set for March 7.

Kohl’s shares have risen nearly 19% this year, as of Thursday’s market close. That brings its market cap to $8.2 billion.

Read the full press release from Kohl’s here.