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

Like this article? Help us with some feedback by answering this survey:

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.