Kohl's Stock News and Forecast: KSS shares face optimism from dueling bidders
- KSS shares rose 28% in Monday's premarket.
- Two separate investor groups have made offers to buy the company.
- KSS stock may be bought at $64 a share.
Kohl's Corporation (KSS) shares are spiking as much as 28% in Monday's premarket in response to two takeover bids announced over the weekend. First, Acacia Research Corp. reportedly offered $64 a share to take the clothing department store private on Friday, according to Bloomberg. Then on Sunday Bloomberg reported that Kohl's was also fielding interest from the more well-known private equity outfit Sycamore Partners.
Kohl's Stock News: a 36.6% premium
There is no news on what Sycamore Partners may be offering, but the $64 price tag amounts to a 36.6% premium from last Friday's close. Most observers thinks Sycamore would have to offer something materially higher. Sycamore has a prominent track record of capitalizing on underperforming retailers, especially fashion brands. Its past acquisitions include Belk, Express and Staples.
The Acacia Research offer is backed by Starboard, an esteemed activist firm. Two existing shareholders, Macellum Advisors and Engine Capital, have sent letters to Kohl's board in the past two months asking for changes in strategy and to be open to buyout offers.
Kohl's is considered a deep value stock and totes a price-to-earnings ratio of just 7.3. As of Friday, the stock was trading below its January 2001 price. KSS stock was trading at approximately 40% below its enterprise value before the offers were announced.
KSS key statistics
| Market Cap | $6.5 billion |
| Price/Earnings | 7.3 |
| Price/Sales | 0.4 |
| Price/Book | 1.4 |
| Enterprise Value | $11.4 billion |
| Operating Margin | 10% |
| Profit Margin |
5% |
| 52-week high | $64.80 |
| 52-week low | $42.68 |
| Short Interest | 13% |
| Average Wall Street Rating and Price Target | Hold, $67.36 |
Kohl's Stock Forecast: bidding war could push price higher
If you already own KSS shares, you are in luck. If you do not, it is hard to say whether you should jump on the bandwagon. With two activist shareholders pushing for the sale, and two bidders already in buyout talks, it would appear exceedingly likely that a buyout goes through.
Typically, the market pushes the stock up to about 5% to 10% below the offer price in case the deal fails to gain board or shareholder acceptance. In this case, KSS stock was already near the bottom of its price channel. It is possible that hope for a bidding war sends shares higher to the top of the price channel in the area between $62 and $64.
Support is at the nexus of the 9-day and 21-day moving averages just above $51.30 and below there at $45.30.
KSS 1-day chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
