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Kohl’s, Franchise Group Enter Exclusive Negotiation Period at $8 Billion Purchase Price

Kohl's

Kohl’s has entered into exclusive acquisition negotiations with Franchise Group for a three-week period. Franchise Group has offered to acquire the retailer for $60 per share, which would value the company at approximately $8 billion.

The exclusive period was set to allow Franchise Group and its financing partners to finalize their due diligence and financing arrangements before the parties enter into a binding agreement. The deal is still subject to approvals from the Boards of Directors of both companies, and both stated that they will make no further comment until the deal is reached or discussions terminated.

Kohl’s rejected a $64 per share offer from Starboard Value and Acacia Research in January 2022 on the grounds that it undervalued the company, but reportedly became open to lower bids due to the general market downturn and its own poor performance. The $60 per share price tag is still a significant premium over the retailer’s $45.80 share price as of June 6.

Franchise Group reportedly made a $9 billion bid in April 2022, people familiar with the matter told Reuters. Backing for the deal reportedly came from investment firm Vintage Capital Management LLC, which has a 12.3% stake in the retail holding company. Kohl’s stated that it had received 20 takeover bids in March 2022, with other interested parties reportedly including a consortium of buyers backed by Leonard Green & Partners LP, including Authentic Brands; Sycamore Partners; and a group including Acacia Research Corp.

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Franchise Group has acquired several other struggling retailers in recent years, including Pet Supplies Plus in 2021 and The Vitamin Shoppe, Sears Hometown and Outlet Stores and Buddy’s Home Furnishings in 2019. The firm changed its name from Liberty Tax to Franchise Group following the acquisition of Buddy’s.

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