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Kohl’s initiates exclusive sales talks with Franchise Group

The Kohls logo appears on the outside of a Kohls store on January 24, 2022 in San Rafael, California.

Justin Sullivan | Getty pictures

Kohl’s said on Monday that it has entered into exclusive negotiations with the retail holding company Franchise Group, which proposes to buy the dealer for $ 60 per share.

Such a price tag would value Kohl̵[ads1]7;s at about $ 8 billion.

Kohl’s shares closed at $ 42.12 on Monday, giving the trader a market value of around $ 5.4 billion.

The franchise group is working with Oak Street Real Estate Capital to finance the deal primarily through real estate, according to a person familiar with the matter. The person requested anonymity because the agreement has not been completed.

A representative of Oak Street Real Estate declined to comment.

The transaction is subject to approval by both companies’ boards, Kohl says in a press release. There is no guarantee that any agreement will be reached, it says.

The exclusive three-week period will allow the Franchise Group – which owns Vitamin Shoppe and Buddy’s Home Furnishings, among others – and its financing partners to complete due diligence and financing arrangements, and for the parties to complete negotiations on binding documentation, Kohl’s said.

The retailer added that it will not comment further until an agreement is reached or discussions are concluded.

The saga at Kohl’s has been played for more than half a year.

The department store chain outside the mall was first encouraged in early December 2021 by New York-based hedge fund Engine Capital to consider a sale or other alternative to raise its stock price. At the time, Kohl’s shares were trading at around $ 48.45.

In mid-January, activist hedge fund Macellum Advisors pushed Kohl’s to consider a sale. Macellum’s CEO, Jonathan Duskin, claimed that managers were “significantly mismanaged” by the business. He also said that Kohl’s had a lot of potential left to unlock with his property.

In early February, Kohl’s said it had brought in bankers from Goldman Sachs and PJT Partners to help dealers’ offerings.

Last month, Kohl’s reported that sales for the three-month period ending April 30 fell to $ 3.72 billion from $ 3.89 billion in 2021. The company also cut its profit and revenue forecast for the full fiscal year, disappointing investors and blurring the picture for a potential deal.

Kohl’s shares reached a 52-week high of $ 64.38 at the end of January.

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