Kohl's Corporation (NYSE:KSS) revealed that it has called off talks over its $8 billion sale to Vitamin Shoppe owner, the Franchise Group Inc, amid rising interest rates and an uncertain retail environment.
The giant Menomonee Falls, Wisconsin-based department-store chain said that it would no longer pursue a sales process and will instead focus on navigating current conditions on its own.
Kohl’s chairman Peter Boneparth said sinking markets and difficult financing conditions had made a deal unreachable.
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“Given the environment and market volatility, the board determined that it simply was not prudent to continue pursuing a deal,” Boneparth said in a statement, while signaling that Kohl’s had ended its strategic review.
Investors responded negatively, sending Kohl’s stock down over 19% to $28.91 on the New York Stock Exchange.
Kohl’s last month entered exclusive talks to sell itself to Franchise Group, after a sales process that attracted at least 25 bidders including the private-equity firm Sycamore Partners and Canada’s Hudson’s Bay, owner of Saks, during a months-long sales process.
Boneparth added: “Kohl’s is a financially strong company that generates substantial free cash flow and has a clear plan to enhance its competitive position and improve performance over the long term.”
Meanwhile, the board reaffirmed its commitment to executing a $500 million Accelerated Share Repurchase program, to start immediately following the company’s second-quarter earnings results. This is part of Kohl’s previously announced $3 billion share repurchase authorization.
Kohl’s is the largest department store chain in the United States, with 1,162 locations.
Meanwhile, Associated Press reported that it was the second time this week that a major retailer retreated from a potential sale. Walgreen’s just said that it was giving up on its plans to sell its Boots business in the UK.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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