Simon Property Group and Brookfield Partners are reportedly taking a closer look at bidding for Kohl’s, CNBC reported Friday.
The two mall operators could have a stronger chance of success if they join forces with private equity firm Leonard Green & Partners and brand management firm Authentic Brands Group (ABG).
Counting Leonard Green as an investor, ABG is the common denominator between the private equity player and the two real estate investment trusts. ABG’s joint venture with Simon called SPARC has worked with Brookfield on a number of transactions, including deals for Aéropostale and JCPenney. Simon and Brookfield initially made the offer for the bankrupt department store retailer, and ABG joined forces after the deal was completed to flow brands including Juicy Couture, Shaquille O’Neal XLG, Eddie Bauer, Forever 21 and Sports Illustrated into JCP stores.
Leonard Green is leading a consortium that submitted a bid for Kohl’s earlier this month. Other preliminary expressions of interest, whether from the Franchise Group, Hudson’s Bay Co. or Sycamore Partners, are coming in the $69-$70 range valuing a deal around $9 billion. Simon and Brookfield joining forces with Leonard Green’s group could provide a bit more oomph in bid for Kohl’s. By pooling their resources, each consortium member could take on less risk while submitting a higher combined bid.
Another potential bidder is Acacia Research, backed by activist investor Starboard Value. Acacia essentially started the push for Kohl’s to sell itself when it made a $9 billion non-binding offer in January.
Simon and Brookfield didn’t immediately respond to a request for comment.
Meanwhile, Kohl’s is fighting a proxy board battle with activist investor Macellum Capital Management. Stockholders will cast their votes at the May 11 annual shareholder meeting.
Kohl’s continues to focus on the long-term value its management team is creating by growing the active category, inflating digital sales from $6 billion to $8 billion and opening 100-plus smaller-market stores. Institutional investor T. Rowe Price said on Thursday that it plans to back the retailer’s board nominees.
Macellum, meanwhile, attacked Kohl’s leadership for its “failed operating plan” and prioritizing options that would preserve its control of the board.