Kohl's Calls on Shareholders to Reject Activist Macellum's Proposal Ahead of Annual Meeting

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  • Kohl's is pushing back against activist investor Macellum's campaign to add new directors to the retailer's board.
  • In a letter sent to its shareholders on Thursday, Kohl's called Macellum's nominees an "unqualified slate."
  • Kohl's is trying to rally its shareholders ahead of an annual meeting in May and amid pressure for the retailer to sell itself.

Kohl's on Thursday sent a letter to shareholders in which it pushed back against activist investor Macellum's campaign to add new directors to the retailer's board.

In the letter, which comes ahead of Kohl's annual meeting with shareholders in May, the retailer called Macellum's nominees an "unqualified slate."

"Macellum is promoting an ever-changing narrative, misinformed claims, and value-destructive proposals, all of which reveal a reckless and short-term approach that is not in the interest of driving long-term, sustainable value," Kohl's said.

In a statement, Macellum said that it is disappointed, although not surprised, by Kohl's "inaccurate and misleading" letter.

"We standby our belief that Kohl's can be a source of tremendous value if it is finally unshackled from the current board and placed in the right hands – whether that be in the public or private market," a spokesperson said in a statement to CNBC. "Our nominees would represent a substantial improvement over the incumbents and look forward to sharing their vision for value creation."

Macellum, led by veteran retail-industry investor Jonathan Duskin, amplified its pressure on Kohl's in February, following months-long criticisms of the big-box retailer for not performing as well as it could in 2021. It nominated 10 directors, including Duskin himself. That came after the activist called for Kohl's to consider selling itself.

Kohl's has since started working with bankers and other financial advisors to consider bids for its business. It has already rejected one offer from Starboard-backed Acacia Research, at $64 per share, calling it too low.

Earlier this month, it confirmed receipt of multiple preliminary buyout offers. One of those bidders is Saks Fifth Avenue owner HBC, a source familiar with the transaction previously told CNBC. HBC declined to comment.

In its letter, Kohl's said that Macellum's push for a "hasty sale at any price" reveals a short-term approach that isn't in the best interest of the company's shareholders.

Regarding its conversations with potential bidders, Kohl's added that it is involved in further engagement with select bidders, "including assisting with further due diligence that may create opportunities to refine and improve proposals."

Shares of Kohl's fell less than 1% in early trading. The stock is up about 24% year to date, bringing Kohl's market cap to $7.9 billion.

Find the full letter sent to Kohl's shareholders here.

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