Macellum Advisors, an investment firm known largely for their activism, said in a statement Thursday that it is nominating a set of 10 candidates to serve on Kohl’s board of directors, harshly criticizing the chain’s new shareholder rights plan and proposing the department store giant consider a sale.
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In the open letter to shareholders, Macellum, which owns a stake of almost 5% in Kohl’s, accused Kohl’s of poorly facilitating recent organizational changes and takeover approaches, one of which is worth almost $9 billion. Kohl’s stated last week that its board has reviewed several “expressions of interest,” but are unhappy with the valuations presented in those proposals.
Macellum added that the the shareholder rights plan, or poison pill, that Kohl’s has implemented, serves no purpose other than making it difficult for shareholders to receive maximum value returns for their investment in the company. The poison pill only takes effect if 10% of Kohl’s shares are acquired by another company. Such shareholder rights plans are typically put in place to ward off buyers seeking to strong-arm a takeover of a business at a low valuation.
Macellum made it a point to highlight that the Kohl’s board hasn’t committed to submitting the poison pill for shareholder approval.
“We feel compelled to share our blunt concerns because the board’s approach to honoring its fiduciary duties leaves a lot to be desired,” the letter stated. “Notably, the poison pill adopted by the board seems like it was structured to chill a sale process.”
The list of candidates includes experienced professionals from varying industries, including retail and mergers and acquisitions.
“In sum, the time for substantial boardroom change at Kohl’s has come,” Macellum’s letter said. “We fear the opportunities in front of the company right now may not exist a year from now. Our nominees are the right directors at the right time.”
On Jan. 18, Macellum issued a letter to Kohl’s shareholders indicating it was considering a panel of director nominees, specifically calling out the company’s poor performance relative to its peers and competitors. Barely a week later, Kohl’s confirmed on it was being courted by potential buyers.
Kohl’s has reportedly been approached by both Starboard Value-backed Acacia Research and private equity firm Sycamore Partners, with neither deal coming to fruition.
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Source: https://www.law360.com/articles/1463853
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