Kohl’s poor financial performance has raised fears that the company’s auction will fail – even as management continues to advertise strong interest from potential suitors, according to The Post.
Offers are coming in the “coming weeks”, Kohl’s confirmed on Thursday after providing a terrible first quarter, during which it reduced its profit and sales prospects for the year and said consumers were cutting costs, leading to a 5.2% comparable decline in sales compared to a year ago.
Analysts expected a 0.5% increase in sales – as well as potential bidders.
“I was shocked by the results,” said a source close to the sale process, adding that “I do not believe that acceptable offers will be offered now.”
Kohl’s stinking neighborhood is complicated by the turbulence of financial markets.
“No one is signing to finance the mega-merger now,” a source at a loan from one of the largest banks told The Post. “There is no market.”
Kohl’s reported a 5.2% drop in sales compared to a year ago. AP
Banks are afraid to borrow money in a deal with large leverage against any company, the banker added.
Earlier this year, Kohl’s turned down a $ 9 billion offer from Starboard Value LP, which wanted to buy the company for $ 64 a share, or a 37% premium. Kohl’s said it was too low, and adopted the so-called poison pill to prevent activist investors from acquiring more than 10 percent of its shares.
Now enthusiasm for the deal has probably waned, sources told The Post, in part because of Kohl’s lack of transparency.
Last week, Kohl’s won a proxy battle to replace 10 of its directors. But they might not have confirmed the board if they had known about the company’s latest performance, sources said.
“In general, the company knew that their results were terrible and they did not tell anyone and received the shareholders’ vote for their board of directors,” said a source close to the sale process.
The company said there were at least 25 stakeholders. Top bidders include Canadian department store Hudson’s Bay Co., shopping center giant Simon Property and Canada-based Brookfield Asset Management – which offered $ 8.6 billion, according to The Post – and private equity giants Sycamore Partners. Leonard Green & Partners.
Kohl’s won a proxy battle to replace 10 of its directors. But they might not have confirmed the board if they had known about the company’s latest performance, sources said.
Kohl’s chief executive, Michelle Gus, said on Thursday that the company was “pleased with the number of countries that recognize the value of our business and plan.”
The retail chain reluctantly agreed to start the sale process after activist investor Macellum Advisors first forced the company to do so in January. However, sources told The Post that the Wisconsin-based company could support privately for a result in which bidders fade – despite the public image management it offered.
However, others say the sale is still viable, but at a greater discount.
Potential buyers may cut their bids, but the company is an attractive asset – including a valuable real estate portfolio – that a nasty quarter has not canceled, another source said.
Shares of Kohl’s closed at $ 45.04 on Thursday, well below $ 63.11 just two months ago.
Kohl’s did not immediately respond to comment.
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