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Wisconsin senator urges Kohl’s to reject buyout offers that threaten jobs in retailer’s home state

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A view outside a Kohl’s store in Miramar, Florida.
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A U.S. senator from Wisconsin is urging Kohl’s to not accept any buyout offer that might prelude a bankruptcy filing or threaten workers’ jobs in the retailer’s home state.

Sen. Tammy Baldwin, a Democrat, sent a letter to Kohl’s board of directors on Thursday asking the company to reject proposals that would entail dramatically growing debt levels, hiving off assets or increasing shareholder payouts at the expense of reinvesting in the business.

“I ask that you carefully consider each proposal’s long-term strategy and reject any offers that propose a sale-leaseback, increase the risk of bankruptcy, or imperil the jobs and retirement security of thousands of Wisconsin workers,” said Baldwin in the letter, which was seen by CNBC.

A representative from Kohl’s didn’t immediately respond to CNBC’s request for comment.

On Monday, following months of pressure from activists to consider a sale, Kohl’s confirmed it had received multiple preliminary offers from parties interested in acquiring the department store chain. Kohl’s didn’t offer specific names of those bidders. One offer came from Canadian-based retail conglomerate Hudson’s Bay Co., said a person familiar with the matter. Separately, reports have said that private equity firm Sycamore Partners is considering a bid. A spokesperson for Sycamore declined to comment.

Kohl’s has already rejected one offer — from Starboard-backed Acacia Research — to acquire the business for a price tag of $64 per share. Kohl’s deemed the deal to be too low, but it has since been working with bankers at Goldman Sachs to field other suitors. Thus far, it says it has engaged with more than 20 parties. Kohl’s shares opened Friday at $61.67, having rallied about 24% year to date.

Private equity firms and hedge funds have time and again come under fire for pushing retailers into bankruptcy and stiffing employees. A 2019 report from United for Respect calculated that more than 1.3 million Americans lost their jobs in the prior 10 years as a result of private equity ownership in retail. It cited bankruptcies at Toys R Us and Sears as two examples.

Baldwin pointed in her letter to ShopKo, also founded in Wisconsin, which ended up saddled with debt after it was acquired by Sun Capital Partners in 2005, for around $1.1 billion. ShopKo filed for bankruptcy protection in 2019 and ultimately liquidated after it couldn’t find an acquirer.

Senator Tammy Baldwin, a Democrat from Wisconsin and chair of the Senate Appropriations Subcommittee on Agriculture, Rural Development and U.S. Food and Drug Administration (FDA), speaks during a hearing in Washington, D.C., U.S., on Thursday, June 10, 2021.
Al Drago | Bloomberg | Getty Images

ShopKo’s roughly 3,000 employees in Wisconsin lost their jobs, said Baldwin. “Wisconsinites are rightly concerned that history will repeat itself at Kohl’s.”

In total, Kohl’s counted about 99,000 employees in 2021, including part-time workers over the holiday season. According to Baldwin, Kohl’s employees roughly 8,000 Kohl’s people across Wisconsin.

“I understand that you are under pressure from various investment funds that have recently purchased large blocks of Kohl’s outstanding shares,” said the senator. “I believe that the demand that ‘their’ capital be returned through stock repurchases is a sleight of hand that only serves to enrich short-term shareholders.”

Kohl’s is set to hold an annual meeting with shareholders on May 11.

In a letter to shareholders dated March 21, Kohl’s wrote, “While we have strong confidence in our strategic plan, our board is testing and measuring it against alternatives. … The board is committed to pursuing the path that it believes will maximize shareholder value.”

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