Kohl’s rejects takeover offers, say they undervalue its business

• Kohl’s adopted a shareholder rights plan, also known as a “poison pill”

• Shares of the company rose more than 2% on Friday

Kohl’s Corp. (NYSE: KSS) said on Friday it has adopted a shareholder rights plan as the recent takeover offers undervalue its business.

The department store said the shareholder rights plan, also known as a “poison pill,” is adopted to avoid hostile takeover and will be effective immediately and will expire in February 2023.

Shares of the company rose more than 2% on Friday.

“The valuations indicated in the current expressions of interest which it has received do not adequately reflect the company’s value in light of its future growth and cash flow generation,” Kohl’s said in a statement.

Last month, Kohl’s received potential takeover offers from two companies.

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Private equity firm Sycamore offered to pay at least $65 per share for Kohl’s, which is a 39% premium to its last stock close.

Kohl’s also got an offer from Acacia Research (NYSE: ACTG) to pay $64 per share for the company. Acacia Research is backed by activist investment firm Starboard Value. 

Pressure on Kohl’s

Kohl’s has been recently facing pressure from activist investors Macellum Advisors and Engine Capital to improve its business.

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“We are disappointed and shocked by Kohl’s hasty rejection of confirmed indications of interest,” said Jonathan Duskin, Macellum’s managing partner, in a letter issued Friday after Kohl’s decision was announced. 

“This morning’s rejections — which come just two weeks after outreach from potential acquirers," the letter said, "only validates for us that a majority of the Board is entrenched and lacks objectivity when it comes to evaluating value-maximizing sale opportunities relative to management’s historically ineffective standalone plans.”

Picture Credits: Getty Image