Macellum Issues Letter to Kohl's (KSS) Board Regarding Need to Immediately Appoint Shareholder Representative to Support Review of Strategic Alternatives

Macellum Advisors GP, LLC (together with its affiliates, “Macellum” or “we”), a long-term holder of nearly 5% of the outstanding common shares of Kohl’s Corporation (NYSE: KSS) (“Kohl’s” or the “Company”), today issued an open letter to the Company’s Board of Directors (the “Board”).

***

Dear Members of the Board,

As you know, Macellum is a nearly 5% shareholder of Kohl’s and has spent multiple years trying to engage with the Company to catalyze enhanced value creation. The public letter we issued last week encouraged the Board to initiate a comprehensive review of strategic alternatives, including a potential sale of Kohl’s to one of the many well-capitalized financial sponsors that we believed were – and remain – interested in acquiring the Company. Despite another year of stagnation and more than two decades of underperformance at Kohl’s, the Board quickly responded to us with a dismissive press release that referred to our assessment of potential suitors as “unfounded speculation.”1 Now, less than one week later, the Board has validated our assessment by confirming expressions of interest after a $64 per share all-cash offer from Acacia Research Corporation and a reported approach from Sycamore Partners.

While the Board boasted last week that “Kohl’s strategy is producing results,” the market’s extremely positive reaction to the expressions of interest confirmed this morning indicates to us that investors want an organized sales process.2 Multiple sell-side analysts also issued notes yesterday that acknowledge the superior value that can likely be obtained via a sale. In our view, the Board cannot ignore yesterday’s approximately 35% spike in the Company’s share price and try to chill acquirers’ interest.3

Rather than cling to the status quo, we urge the Board to immediately take the following steps to try to maximize value for all shareholders:

1. Publicly commit to carrying out a robust process to review strategic alternatives;
2. Form a special committee of independent directors to oversee the review, retain advisors and solicit proposals from all interested bidders, and;
3. Invite a Macellum representative to join the Board and lead the special committee, effectively providing credibility to the process.

Though we believe Kohl’s could be a source of significant value with a significantly refreshed Board, improved execution and an optimized balance sheet, we feel the best risk-adjusted path forward for shareholders right now is a credible and open process to evaluate a full sale of the Company at an attractive premium. We are eager to lend our expertise and support this process if the Board will extend us an invitation without onerous conditions and terms. Candidly, we do not have faith in the current Board to run this process on its own, nor do we believe the Board is capable of objectively evaluating possible bids relative to its historically overly optimistic assessments of management’s standalone plans.

In the interest of transparency, we are making this correspondence public. We hope the Board responds to us in a constructive and timely manner. However, we reserve our right to hold the current directors accountable through an election contest or the appropriate legal channels if the Board chills a value-maximizing sales process.

Sincerely,

Jonathan Duskin
Managing Partner
Macellum Capital Management

You May Also Be Interested In

• T-Mobile (TMUS) and EQT Announce JV to Acquire Lumos
• Autonomix Medical (AMIX) Enters into Agreement with NoiseFigure Research
• Central Securities (CET) Releases Report to Stockholders