US retail chain Kohl’s Corporation has announced that it has closed its strategic review process with Franchise Group (FRG), ultimately deciding to not go ahead with an agreement.
It follows an exclusive negotiation period with the group, through which Kohl’s chair of the board, Peter Boneparth, said that “the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement”.
The sales process was carried out by Goldman Sachs, which Kohl’s said had engaged with more than 25 parties, five of which submitted acquisition proposals with “denominated value”. Ultimately, the company decided to enter into an agreement with FRG, which submitted a 60 dollar per share proposal that “significantly exceeded the other then available bid”. FRG then revised its offer to 53 dollars.
25 interested bidders
In a release, Boneparth continued: “Given the environment and market volatility, the board determined that it simply was not prudent to continue pursuing a deal. As always, the board remains open to all opportunities to maximise value for shareholders, and we look forward to actively engaging with our shareholders as we move forward to ensure we are considering their perspectives in our plans.”
The chair added that Kohl’s is a financially strong company, noting that the price and terms of FRG’s most recent proposal were not fully executable or complete.
In its most recent release, the retail group reaffirmed its commitment to carrying out a 500 million dollar share repurchase programme, which it will commence with following its Q2 earnings results.
In an update, Kohl’s said its results, scheduled for August 18, will likely be impacted due to inflationary pressures on consumer spending, with sales now expected to be down high-single digits for Q2.
It added that it will be continuing to carry out a transformation strategy of its business model, with new initiatives to be introduced in order to scale and enhance growth. This includes building on partnerships such as Sephora at Kohl’s, as well as the opening of small format stores over the next four years.