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Reuters: Franchise Group Makes $9 Billion Bid for Kohl’s

Kohl’s has reportedly received a $9 billion takeover offer from Franchise Group, the parent company of The Vitamin Shoppe and Buddy’s Home Furnishings, three people familiar with the matter told Reuters. The offer values Kohl’s at $69 per share, slightly lower than the $70 per share Hudson’s Bay Co. said it is willing to pay but still well above Kohl’s April 11 share price of $57.24.

A consortium of buyers backed by Leonard Green & Partners LP, including Authentic Brands, also has made a bid for Kohl’s, according to the sources. Sycamore Partners and a group including Acacia Research Corp also have proposed takeover offers as Kohl’s weighs its options. In late March, Kohl’s stated that it had received bids from 20 companies.

Franchise Group’s offer would require the backing of investment firm Vintage Capital Management LLC, which has a 12.3% stake in the retail holding company. Franchise Group itself carried a market value of $1.6 billion and long-term debt of $1.9 billion as of December 2021.

Kohl’s initially rejected a bid from Sycamore Partners and Acacia Research in February on the grounds that it undervalued the company but has since worked with Goldman Sachs to explore additional possibilities. The bids were at $65 and $64 per share, respectively, which means the newer offers could cross the threshold that Kohl’s considers agreeable.

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The retailer has been fighting off activist pressure even as it invites solicitations from potential buyers. Engine Capital, which controls a 1% stake in Kohl’s has urged the retailer to spin off its ecommerce operations on the grounds that the digital business as a standalone would be worth more than Kohl’s as a whole. Additionally, Macellum Advisors GP has nominated 10 directors to the company’s 14-member board as part of its own push for a sales process. The hedge fund has responded to the current bidding process by urging Kohl’s to be more open about the process and give both bidders and shareholders a fuller financial picture.

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