Kohl's Ends Buyout Talks With Franchise Group
Kohl's has rejected a $53-per-share takeover bid — down from a previous offer of $60 — from the Franchise Group (FRG), according to a regulatory filing with the Securities and Exchange Commission by the retailer on July 1. "Despite a concerted effort on both sides, the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement," Kohl's Board Chair Peter Boneparth said in a statement. The department store chain, citing macroeconomic issues including inflation, also lowered its Q2 sales estimates from a low-single digit decline to a high-single digit decline, according to a press release.
Total Retail's Take: Kohl's has been seeking a buyer to revive its business for more than a year, working with Goldman Sachs to evaluate more than 25 parties. Ultimately, Kohl's engaged exclusively with FRG — the parent company of The Vitamin Shoppe — whose $60 proposal exceeded the other proposals available. Ultimately, however, "FRG submitted a revised proposal at $53 per share without definitive financing arrangements to consummate a transaction, and the parties faced significant obstacles reaching a fully executable agreement," Kohl's said in a statement.
Kohl's then added that as a result of the current financing and retail environment, its board determined that it's "in the best interest of shareholders for management to continue to execute Kohl's strategic plan on a standalone basis." The plan includes initiatives such as building on Sephora at Kohl’s, which will expand to more than 850 stores by the end of 2023; opening more than 100 smaller format stores over the next four years; and growing its digital business.
While retail insiders weren't surprised by this move — they believed Kohl's never really wanted to sell the business to begin with — it will be interesting to see what's next on the horizon for Kohl's in the year ahead.