Activist investment firm Macellum Advisors GP LLC on Monday urged Kohl’s to be more open about its sales process, urging the retailer to give bidders and shareholders a fuller financial picture of itself.
The firm, in a letter to Kohl’s board, asked the company to say when it plans to accept final bids and explain how much access potential buyers have to management and data to shape their offers. It also asked Kohl’s to pre-release first-quarter financial results before next month’s annual meeting.
Macellum, which has a 5.4% stake in the retailer, is pushing to take control of Kohl’s board and wants the company to sell itself, arguing that a new “capital-intensive” three-year standalone strategy is hurting the share price.
Kohl’s said its board is “thoughtfully and thoroughly evaluating proposals to realize full and fair shareholder value and weighing those against the value-creation potential of a compelling strategic plan.” The company said it will not let Macellum drive “process decisions.”
Kohl’s share price, which traded at $60.54 on Monday, has climbed recently because investors are holding out for a sale, Macellum said. But the investment firm also accused the retailer’s board of “putting its thumb on the scale to keep Kohl’s mired in operational mediocrity” and said directors squandered their credibility with shareholders through a secretive and confusing sales process.
“A number of sizable shareholders have informed us that they are extremely frustrated with the Board’s poorly communicated process,” the letter said.
Kohl’s last month said it had contact with more than 20 parties and had signed confidentiality agreements with some.
At least three interested parties, including luxury department store operator Hudson’s Bay Co., private equity firm Sycamore Partners and a group that includes Acacia Research, a holding company for business controlled by activist hedge fund Starboard Value LP, have made bids for Kohl’s, which is valued at $7.8 billion, sources said. Some have offered to pay as much as $70 a share, the sources said.
Several bidders expressed concerns about the speed of the sale process and their ability to access information for diligence purposes, the sources added.
Representatives for the bidders declined to comment.