Cowen’s Take on Kohl’s Takeover Prospects – WWD

Kohl’s has received at least two takeover bids in the range of $64 to $65 per share and will likely in the next few weeks determine whether to accept or decline any of them.

But on Tuesday, Cowen Equity Research released a report that raised some doubts about whether any bids on the table triggered a trade, pointing out that “the response of the Upcoming investors are told whether a transaction can be completed at a higher price.”

Cowen also reported that a sale and leaseback of Kohl’s real estate, valued between $2 billion and $3 billion, would be required to finance a deal, although the likelihood of such a sale is unlikely. sure.

After press coverage of the bid appeared in late January, Kohl’s The stock price rose 36% to more than $63. Menomonee Falls-based value retailer, with headquarters in Wisc. acknowledges that they have received letters of interest in acquiring the company.

Shares of Kohl on Tuesday traded at about $59.60.

“Overall, sentiment is mixed regarding the possibility of a Kohl’s acquisition, but the majority of investors believe a deal can be completed against the original asking price and that a resale of $2 billion to $3 is needed. billion dollars to buy Kohl’s. Regarding the potential for another offer, incoming response was split between believing another bid could materialize,” Cowen wrote in his report.

“Our view is that based on Kohl’s trade price and various probabilities and prices, there could be a 20 to 30% chance, less or less, that the trade will be made at $75. above. Also, if the deal is not closed with 40% probability, more or less, the stock may or may not trade down to $43 to $55. ”

Cowen, who specializes in in-depth investment research and analysis across multiple sectors, said in his report that Kohl’s off-mall remains “meaningfully attractive to a multitude of investors because of the industry’s lack of interest.” The retail sector turns to off-mall to tend to better traffic and convenience for shoppers. ”

Kohl’s properties are 35% owned by the company, excluding premises leases. The company values ​​its real estate at $7.8 billion, according to a 10K document cited by Cowen.

Cowen Research estimates that stores can sell for $10 million to $14 million each, depending on location and traffic. Additionally, Kohl’s distribution centers remain “particularly attractive in the market due to limited supply, and we note that Kohl’s owns 12 of its 15 distribution centers,” Cowen reported.

According to Cowen, Kohl’s turnaround accelerated last year amid activity among active investors and had faced “a number of obstacles related to inventory management and the company’s business.” women. That said, it is important to acknowledge the strong digital business, the positive beginnings of the Sephora partnership, and the strong growth in the active segment. “Sephora imported about 200 Kohl stores last fall and is expected to reach at least 850 stores by 2023.”

The report also indicated that Kohl’s is well positioned to hit its fiscal 2023 goals ahead of schedule, although the stock has had a “muted” response.

Cowen says the bidding process takes between a week and a month, and they expect another announcement from Kohl’s management about the bids within the next few weeks.

Kohl’s has come under intense pressure for months from shareholder activists pushing to change the retailer’s board composition and push the company to consider strategic alternatives to enhance shareholder value. east, including possibly selling the company or redesigning the dot-com and brick- and brick-and-mortar stores into two separate companies, which Hudson Bay Co. did last year with the Saks Fifth Avenue, Saks Off 5th and Hudson’s Bay brands. The segregation strategy remains controversial in the retail industry.

Kohl’s 2021 results will be discussed in detail during the March 1 earnings call. Cowen’s Take on Kohl’s Takeover Prospects – WWD


Linh is a Interreviewed U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. Linh joined Interreviewed in 2023 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with me by emailing:

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