Things are heating up both in the U.S. and across the pond.
Kohl’s annual shareholders meeting next week will resolve Macellum’s fight to seize control of the retailer’s board. And in the U.K., mergers and acquisitions take center stage as more buyers dig deeper in the details of up-for-grabs labels Ted Baker and Missguided.
Wednesday is D-Day for Kohl’s as the ballots cast at the shareholders meeting’s board election could determine the department store’s future.
Influential proxy advisory firm Glass Lewis has sided with Kohl’s board picks. It also said Kohl’s total shareholder return “has been reasonably in line” with that of its peer groups since Michelle Goss became CEO—although the same metric in the period so far this year “has exceeded” rivals. Kohl’s return was 39.0 percent last year, versus the S&P 500’s 21.0 percent and department store peers at 16.2 percent.s
Plus, Kohl’s has been “reasonably transparent” about what’s involved with a potential sale, though Glass Lewis came down against the idea of sale-leasebacks. It said Macellum hadn’t highlighted any successful examples where a retailer has undertaken a sale-leaseback akin to what the activist investor proposed. Noting the sale-leasebacks that Sears Holdings Corp. executed in 2015, Glass Lewis “suspect[s] the loss of [Sears] best properties from that sale-leaseback likely did not help the situation there.”
How the voting could go is anyone’s guess. Kohl’s has at least 20 institutional investors, with The Vanguard Group (10.94 percent stake), BlackRock Inc. (10.52 percent), Macellum (5.41 percent), T. Rowe Price Group (5.29 percent) and J.P. Morgan Asset Management (5.21 percent) leading the pack. The rest of the top 20 hold stakes varying from 1.15 percent up to 3.89 percent. T. Rowe Price has said it would back Kohl’s, but its stake effectively cancels out the votes Macellum will cast in its own favor. The top two shareholders, Vanguard and BlackRock, have not given any indications as to which way they will vote, nor has anyone else on the Top 20.
British M&A activity
Meanwhile, Missguided and Ted Baker have attracted new bidders.
JD Sports quickly emerged as an interested buyer after it failed to obtain a majority stake last year when the fast-fashion brand instead took a significant investment stake from Alteri Investors. Now JD will compete against the likes of six other firms all considering bids a struggling e-tailer whose CEO just stepped down. Asda, Asos, Shein and Frasers Group join JD as possible strategic buyers, while financial names are said to include CVC and Carlyle Group.
At Ted Baker, the U.K. arm of American private equity firm Sycamore Partners might be losing its first-mover advantage. For a short time it seemed that Sycamore was the sole party interested in the high street retailer. But since earlier this year when Sycamore went public with its interest in acquiring the brand, others have leapt into the fray.
Ted Baker is in talks with three potential buyers, including Leonard Green & Partners, working with Lion Capital, General Atlantic and Authentic Brands Group. On Friday, Bluestar Alliance, also a brand management firm, emerged as the likely third bider, according to a WWD report.
Both brands are still in the early- to mid-stages of the process as they wrap up due diligence and formulate nonbinding bids.