Kohl’s (KSS) said Monday afternoon that it had entered a three-week exclusive trading period for a potential sale with Franchise Group (FRG), a holding company that owns The Vitamin Shoppe and other retail brands.
Franchise Group has offered to buy Kohl’s for $ 60 a share. Kohl’s shares closed at $ 42.12 on Monday and rose 10% during Tuesday’s first news quotes.
The deal would value Kohl’s at about $ 8 billion, The Wall Street Journal reported, about 5 times more than it was worth last week.
Kohl’s said that during the negotiation period there were no guarantees that an agreement would be reached.
Department stores have caught the attention of an activist investor and a number of bidders. A sale would end a year-long saga between Kohl’s and some Wall Street investors over the company’s future.
What’s going on at Kohl’s?
With more than 1,100 stores in the United States and about $ 19 billion in annual sales, Kohl’s is the largest department store chain in the United States.
But the entire department store industry has been in structural decline for years under pressure from Amazon, growing large chains that include Walmart (WMT) and Target (TGT) and discount clothing stores like TJMaxx. Companies such as Sears, JCPenney, Neiman Marcus, Barney’s and others have filed for bankruptcy in recent years.
Department stores, including Kohl’s, have seen discounts on player prices come down from the bottom, and the prestige of luxury stores at the top.
The company has tried a handful of approaches to attract customers and avoid competitors, but the strategies have not led to major improvements at Kohl’s.