The future of US retailer Kohl’s Corporation is once again completely open. On Friday, the group announced that the takeover negotiations with the preferred bidder, Franchise Group Inc., had ended without an agreement.
“Despite concerted efforts by both parties, the current financing and retail environment has created significant obstacles to an acceptable and fully enforceable agreement,” Kohl’s chairman Peter Boneparth said in a statement. Given “the environment and market volatility,” the retailer’s board of directors decided it “simply was not prudent to pursue a transaction.”
After talks with initially more than 25 people interested in taking over the company, Kohl’s began exclusive negotiations with the franchise group at the beginning of June. The company had proposed a purchase price of $60.00 per share, “significantly beating the other bids,” the retailer said. In the context of the most recent negotiations, the franchise group reduced its offer to 53.00 US dollars (50.70 euros) in view of the current developments in the financial market and the retail industry and also did not present a final financing concept, explained Kohl’s.
Against this background, it is in the interest of the shareholders that the retailer initially continues its strategic course as an independent company, said Kohl’s. However, the board of directors remains “open to all possibilities to increase shareholder value”.
The company acknowledged that second-quarter sales will fall more than previously expected amid increased “inflationary pressures” on consumers. Management is now anticipating a decline in the high single-digit percentage range, after previously forecasting a decline in the low single-digit percentage range. According to a statement, the company has already taken measures to react to the deterioration in the general conditions. The sale of parts of the real estate portfolio is also being examined. However, the board of directors continues to trust the strategic plan and has decided to accelerate the share buyback, explained Boneparth.