According to The Washington Post, the owners of JCPenney have made an offer to acquire archrival Kohl’s in a deal that could value the department store chain at up to $8.6 billion.
According to sources close to the talks, shopping-mall behemoth Simon Property and Canada-based Brookfield Asset Management — which together rescued JCPenney from bankruptcy in December 2020 — have offered to buy Kohl’s for $68 per share.
Kohl’s stock closed at $60.39 on Monday, up 5.3 percent.
According to one well-placed source, JCPenney’s corporate parents intend to keep the two brands separate while streamlining operations and cutting costs. According to the source, the bidders’ plan for Kohl’s is to cut costs by $1 billion over the next three years.
The Post has sought comment from Simon Property Group and Brookfield Asset Management.
Kohl’s, based in Wisconsin, put itself up for sale earlier this year at the request of activist investors Macellum and Engine Capital, who were dissatisfied with the company’s direction.
Sycamore Partners and Leonard Green & Partners, as well as Saks Fifth Avenue’s Canadian parent company Hudson’s Bay, are reportedly interested in acquiring Kohl’s.
Goldman Sachs has been tasked with overseeing a potential sale process.
According to a source, Simon and Brookfield have proposed that a single management team operate JCPenney and Kohl’s while merging the information technology systems so that one unit is in charge of the chains. According to the source, the companies would also have all private apparel manufactured by the same in-house label.
According to The Washington Post, if the sale is completed, the new company will abandon plans to open Sephora concession stands inside Kohl’s stores.
CEO David Simon, the son of late company co-founder Melvin Simon, leads Simon Property Group. Herb Simon, David Simon’s uncle who co-founded the company with his late brother, owns the Indiana Pacers of the NBA, which the Simon brothers purchased in 1983.
JCPenney was acquired by Simon Property Group and Brookfield Asset Management after the 118-year-old retailer filed for Chapter 11 bankruptcy in May 2020.
JCPenney was one of two dozen retail casualties of the coronavirus pandemic, as lockdown measures prohibited in-store shopping and drove customers to online retailers such as Amazon.
The restructuring resulted in the closure of one-third of the company’s stores nationwide. JCPenney currently operates 689 stores, a decrease from more than 1,110 in 2012.
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