Starboard-Backed Acacia Research Makes $9 Billion Bid for Kohl’s. What to Know.

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Activist hedge fund Starboard Value is behind a group that made a $9 billion bid for department-store operator

Kohl’s
,
according to a report.

The bidding group is led by Starboard-backed Acacia Research, which told Kohl’s (ticker: KSS) that it was assured by bankers that it could get financing for a bid that values the retailer at $64 per share, The Wall Street Journal reported. Kohl’s shares recently traded around $47 apiece.

Kohl’s is no stranger to activist intervention. The company has seen a surge of activist interest in recent months, as investors have grown disappointed by its lagging performance compared to peers. The

SPDR S&P Retail ETF
(XRT) has gained 75% over the past two years, while Kohl’s shares have climbed just 3%.

In the past week, activist investor Macellum Advisors re-initiated its campaign against Kohl’s. The firm holds nearly 5% of Kohl’s shares. In 2021, Macellum reached an agreement with the retailer, winning two seats on Kohl’s board and agreeing to certain standstill provisions, which have recently expired. 

In a letter to Kohl’s shareholders Tuesday, Macellum referred to the past year as “wasted,” claiming that Kohl’s failed to take meaningful action to improve performance. Macellum also criticized Kohl’s for letting more than $7 billion of owned real estate sit idle on its balance sheet—and argued that Kohl’s could improve earnings per share by 55% if it did a sale-leaseback on its real estate.

Macellum urged the retailer to either add more directors with retail experience—or seek a sale.

The Macellum letter came one month after New York-based hedge fund Engine Capital urged Kohl’s to either sell itself or spin off its e-commerce business.

Kohl’s didn’t respond immediately to Barron’s request for comment on the reported bid, but this past week said that its strategy is producing results and that it “continuously evaluates value-enhancing opportunities and is committed to maximizing value for all shareholders.” The retailer will be holding an investor day in March.

As for the bid by Starboard-backed Acacia group, few details were immediately known, and there is no guarantee than an offer will be made. The Journal reported that the group told Kohl’s it received a “highly confident” letter from a bank, which stated the group would be able to obtain debt financing for the bid. Neither Starboard nor Acacia immediately responded to Barron’s request for comment.

Write to Carleton English at [email protected]