June 28, 2022

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Franchise Group considers lowering Kohl's bid to nearly $50 per share from $60

Franchise Group considers lowering Kohl’s bid to nearly $50 per share from $60

People walk near the entrance to a Cole store on June 7, 2022 in Doral, Florida. Kohl’s has announced that it has entered into exclusive negotiations with Franchise Group, which is proposing to buy the retailer for $60 per share.

Joe Riddell | Getty Images

Retail Holding Company franchise group Weighs down its width for kohl to nearly $50 a share from about $60, according to a person familiar with the deal talks.

Kohl’s shares fell more than 8% Wednesday afternoon to about $39 a share.

The person, who asked not to be identified because the talks are private and ongoing, said The Franchise Group, owner of The Vitamin Shoppe, and other retailers are actively studying whether buying Kohl’s is the best use case for Franchise Group’s capital. The person said the company is increasingly concerned that the environment for some retailers could turn bleaker from here, especially if the United States were to enter a recession.

The person added that the franchise group had lined up in financing with the lenders. But the company, run by CEO Brian Kahn, weighs less now as retailers grapple with bloated inventory and rising prices.

Earlier this month, the franchise group Proposes a $60 per share bid for Kohl’s at a valuation of nearly $8 billion. The two companies then entered a three-week window during which any due diligence measures and final financing arrangements could be confirmed. Expires this weekend.

The supermarket chain outside the malls was first urged to consider selling or another alternative to increase its share price In early December 2021 by New York-based hedge fund Engine Capital. At the time, Kohl’s shares were trading around $48.45.

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Then, in mid-January, activist hedge fund Macellum Advisors lobbied Kohl’s to consider selling. Macellum’s CEO, Jonathan Doskin, argued that CEOs were “fundamentally mismanaging the business.” He also said that Kohl has a lot of potential left to open her real estate.

Earlier this year, Kohl’s Received an offer of $64 per share from Starboard-backed Acacia Research, but deemed the offer too low.

Kohl’s shares opened Wednesday at $41.52 and traded as low as $34.64 in late May.

Representatives for Kohl’s and the Franchise Group did not immediately respond to CNBC’s requests for comment.

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