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04/04/2022

Activist investor turns up heat on Kohl’s

Marianne Wilson
Editor-in-Chief
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Kohl’s annual shareholders meeting is scheduled for May 11.

Another salvo has been fired in the ongoing battle for control of Kohl’s Corp.

Activist investor Macellum Advisors, which holds nearly a 5% stake in the department store company, issued an open letter on Monday to the Kohl’s board in which, among other things, it alleged that it is being kept “in the dark” regarding bids for Kohl’s.

“The board has failed to communicate clearly and effectively about its purported process for evaluating potential acquirers’ overtures, even as credible reports swirl about several suitors who are interested in bidding close to or above $70 per share,” wrote Jonathan Duskin, managing partner of Macellum Capital Management,” in the letter. “In all of our years investing in the public market, we have never seen a corporate leadership team operate in a more defensive and insular manner when many shareholders seem very supportive of a sale and various suitors have expressed interest.”

Kohl's has reported receiving multiple nonbinding proposals without committed financing, with Saks’ owner Hudson Bay among the reported bidders.

Kohl's fired back with a statement and said it would not let Macellum pressure it into a sale.

“The Kohl’s board will not allow Macellum’s ill-informed commentary and push for a quick sale at any price to drive process decisions,” the retailer stated. “The 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. Kohl’s board is far more qualified to direct this process than Macellum and its slate of nominees, over half of whom have never served on a public company board and none of whom have served on a board of a retail company approaching the size of Kohl’s.”

As previously reported, Macellum Advisors is looking to take control of the Kohl’s board and has nominated a slate of 10 candidates, including Duskin, for election to the board at Kohl’s annual shareholders meeting on May 11. Last week, Kohl’s sent a letter to shareholders asking them to reject Marcellum’s proposal to add new directors to Kohl’s board and to instead vote for all of the retailer’s board nominees.

Macellum and Kohl’s have been engaged in a war of words — via sharply worded letters — for some time now.

In its letter on Monday, Macellum submitted the following questions to the board regarding the process for a possible sale.

  1. What is the status of the process in terms of the number of interested parties and management’s level of engagement and data sharing?
  1. When does the Company intend to gather final bids, and will it be before the Annual Meeting so that shareholders can be fully informed before they vote on our respective slates?
  2. What steps is the Board taking to ensure interested parties have everything they need to expeditiously submit initial and modified bids?
  3. If new bidders surface, are they being told they are too late or are they being given adequate access to make offers?
  1. Has the Company’s financial advisor, Goldman Sachs, been authorized to canvass the entire market for a full spectrum of financial and strategic bidders and been directed to allow bidders to partner to ensure the highest price can be attained?
  1. Are there any pre-conditions that could dissuade interested parties?
  1. Will shareholders have an opportunity to vote on the highest bid sourced via the process?
  2. Will the 2022 Annual Meeting be delayed if the process needs to extend beyond May 11th?