CA Kohl's Stores Face Possible New Ownership In $8B Deal

CALIFORNIA — Retail chain Kohl's entered talks with a new retail holding company in a proposed $8 billion buyout deal after a reported acquisition attempt by competitor JCPenney, Kohl's announced Monday.

Kohl's entered three weeks of "exclusive negotiations" with Franchise Group Inc., the holding company that owns Vitamin Shoppe, Sylvan Learning and a number of other brands.

The boards of directors of Kohl's and Franchise Group would have to approve any deal, according to a news release from Kohl's. Franchise Group proposed buying Kohl's for $60 per share, or $8 billion, CNBC reported.

Kohl's had previously flirted with an acquisition deal from JCPenney owners Simon Property and Brookfield Asset Management, the New York Post reported in April. That deal valued the company at $8.6 billion.

Simon Property Group and Brookfield Asset Management were not alone; Kohl's considered "multiple bidders" for a potential buyout, according to a Kohl's news release from May. Kohl's brought in banking giant Goldman Sachs to consider proposals from a number of potential buyers.

After considering final proposals, the company landed on Franchise Group, according to Kohl's.

"Kohl’s Board of Directors remains focused on selecting the path that maximizes value for all Kohl’s shareholders," Kohl's said in a news release.

There are 117 Kohl's stores in California.

Kohl's sales dropped significantly in the first quarter of 2022, according to a news release from the company. The chain's share price also decreased significantly in the early months of 2022, according to The Wall Street Journal.

In January 2022, Kohl's stock was worth less than it was 20 years ago, The Wall Street Journal reported.

"The year has started out below our expectations," Kohl’s Chief Executive Officer Michelle Gass said in a news release.

A hedge fund with a stake in Kohl's encouraged the chain in December 2021 to consider a sale or a massive change to the business to bring up the stock price, CNBC reported.

The hedge fund was not alone in questioning Kohl's direction and profitability, according to CNBC. The company was urged again in January by hedge fund advisors to consider a sale.

Kohl's financial trouble follows a larger trend in the United States. The department store sector has struggled to keep up with Amazon and other growing chains like Walmart and Target, according to CNN.