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  • By The Financial District

Franchise Group Joins Battle To Buy Kohl's U.S. Retail Store Chain

Franchise Group Inc., owner, and operator of retail stores such as The Vitamin Shoppe and Buddy's Home Furnishings, has entered the race for Kohl's Corp. with a $9 billion indicative offer, three people familiar with the matter said, Svea Herbst-Bayliss reported for Reuters.


Photo Insert: Kohl's, which operates more than 1,100 stores in the United States, is fighting to fend off a board challenge even as it considers selling itself.



Franchise Group has informed Kohl's it would be willing to pay $69 per share to acquire the department store retail chain, subject to due diligence, the sources said. However, Franchise Group's bid is not the highest offer. Luxury department store operator Hudson's Bay Co. has indicated it is willing to pay at least $70 per share for Kohl's, the sources said.


Kohl's shares ended trading on Monday at $57.24. Kohl's, which operates more than 1,100 stores in the United States, is fighting to fend off a board challenge even as it considers selling itself.



Hedge fund Macellum Advisors GP in February nominated 10 directors to the company's 14-member board, arguing it has not done enough to improve its business and that it should sell itself.


Franchise Group's entry in the process gives Kohl's more options as it explores a sale under pressure from activist hedge funds. The buyer will have to secure committed financing to assume Kohl's debt pile, which totaled $6.8 billion at the end of 2021, including operating leases.


All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Franchise Group has a market value of $1.6 billion and carried long-term debt of $1.9 billion as of the end of December. Its ability to carry out the deal would largely depend on the backing of Vintage Capital Management LLC, an investment firm run by retail investing veteran Brian Kahn.


Vintage owned a 12.3% stake in Franchise Group as of December and Kahn was its chief executive.


Business: Business men in suite and tie in a work meeting in the office located in the financial district.

A consortium backed by private equity firm Leonard Green & Partners LP, which includes Authentic Brands, has also made a bid for Kohl's, the sources said. Private equity firm Sycamore Partners and a group that includes Acacia Research Corp (ACTG.O), a holding company for business controlled by activist hedge fund Starboard Value LP, made offers for Kohl's during the first round of bidding, the sources said. It is unclear whether these parties remain in the process.



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