Sycamore Expresses Interest in Kohl's After Starboard-Backed Bid

(Bloomberg) — Department store retailer Kohl’s Corp. is fielding interest from two suitors at the same time that it’s grappling with multiple activist investors pressuring it to sell.

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The latest potential takeover offer comes from Sycamore Partners, which has reached out to Kohl’s about a deal, according to people familiar with the matter, just days after another bidder emerged with a $9 billion bid backed by hedge fund Starboard Value LP.

It’s unclear how much Sycamore, a private equity retail specialist, is willing to pay for the company, the people said, asking not to be identified because the matter is private. Talks are preliminary and might not result in a transaction, they added.

A representative for Sycamore declined to comment while a representative for Menomonee Falls, Wisconsin-based Kohl’s couldn’t immediately be reached for comment.

Sycamore has track record of buying retailers including acquiring office chain Staples in 2017. It’s also made a long list of retail bets including clothing retailers Express and Ann Taylor Loft, as well as department store Belk, according to its website.

Sycamore’s competition, Acacia Research Corp., is less well known and has so far only made offers before for small technology companies. Acacia made a $64-a-share bid for Kohl’s, Bloomberg News reported Friday. Acacia, which is backed by activist investor Starboard and run by executive Clifford Press, takes stakes in companies with an eye for ownership.

Acacia has a stake of less than 5% in the department store chain, people familiar with the matter said. The group offered $64 a share in cash, according to two of the people, who asked not to be identified because the information was private. That’s a 37% premium to the department store chain’s closing price of $46.84 on Friday.

Activists Engage

Besides Starboard’s involvement, the retailer is also under fire from activist investor Macellum Advisors, which has been urging Kohl’s to make board changes or consider a sale in a letter to shareholders in recent weeks. The retailer has sought to boost foot traffic and sales at its stores through partnerships with other retailers, most notably e-commerce giant Amazon.com Inc.

Another activist, Engine Capital LP, which owns about 1% of Kohl’s outstanding shares, sent a letter to the board in December urging them to run a review of strategic alternatives, including a sale of the company. Kohl’s was reported as a potential take “private candidate” in May last year.

Engine Capital sent another letter to the company Sunday, urging it to run a sales process, the Wall Street Journal reported.

Kohl’s has been trying to make changes in pursuit of a business turnaround. In 2020, Kohl’s struck a deal with beauty products retailer Sephora to place shop-in-shops within the department-store chain. Kohl’s is also betting on athletic-leisure wear and said it sees sales in athletic wear being at least 30% of the business. Executives also often point to the fact that Kohl’s has advantages that other department-store chains don’t have by being mostly located in off-mall locations.

(Updates first two paragraphs with both suitors)