Kohl's Corporation (NYSE:KSS) is said to be ending talks to sell its business to The Vitamin Shoppe's owner Franchise Group as the American retail chain's stock price slides and sales slump.
The Franchise Group, a public company with a market capitalisation of around US$1.6bn, proposed a bid for Kohl's in early June at a price of US$60 per share, valuing the deal at nearly US$8bn.
The two companies then entered a three-week window to finalise any due diligence and final financing arrangements, but that window expired this past weekend.
Kohl recently slashed its profit-and-revenue forecasts for the full year, further complicating a potential deal, when the retailer said sales for the three-month period ended April 30 fell to US$3.72bn from US$3.89bn in 2021.
For the 12-month period ended January 29, 2022, Kohl’s total revenue reached US$19.4bn.
For months, activist investors have pressed for the sale of the company and a shakeup of the board.
A Starboard-backed firm, Acacia Research (NASDAQ:ACTG), earlier this year offered Kohl an offer of US$64 per share, but the company deemed the bid to be too low.
The Franchise Group also considered reducing its bid for Kohl's to US$50 per share from US$60, CNBC reported, as fears of a US recession mounted and outlook for the retail industry grew increasingly grim.
The Federal Reserve raising interest rates to combat surging inflation and stock market volatility has reportedly made it difficult to finance such a deal.
Earlier this week, Walgreens Boots Alliance Inc (NASDAQ:WBA) also canceled its plans to sell its UK pharmacy chain, Boots, citing insufficient interest from third parties given the turmoil in the global financial markets.
Shares of Kohl's closed Thursday at US$35.69, with the stock hitting a 52-week low of US$34.33 during the day.
Kohl's ended the day with a valuation of roughly US$4.6bn, with its shares down about 28% so far this year.
In pre-market, shares were trading 16.87% down on Friday.