The owners of department store giant JCPenney have reportedly made a multibillion-dollar offer to acquire one of the chain’s biggest rivals – Kohl’s – two years after filing for bankruptcy and shutting down nearly a third of its stores.
The proposal from Simon Property and Canada-based Brookfield Asset Management – which together scooped the shopping mall stalwart out of bankruptcy in December 2020 to the tune of $1.5 billion – offers to buy the store at $68 a share, bringing the total value of the deal to $8.6 billion.
A source reportedly told the New York Post, the first to break the story, that the owners plan to maintain the identity of the two competing brands while streamlining operations and cutting costs by roughly $1 billion over the next three years.
The two chains would reportedly be run by a single management team during the initial stages of the merger, the source said. The companies also would have all of their in-house apparel manufactured by the same label.
If successful, the new business would nix previous plans to roll out Sephora stands inside its 689 Kohl’s stores, the insider revealed.
News of the prospective purchase caused Kohl’s shares to skyrocket Monday, surpassing to hit $60.39 – a five percent surge from Friday’s close of $57.36.
Simon Property is run by CEO David Simon, the son of the late company co-founder Melvin Simon. Simon, 62, is also the nephew of Indiana Pacers owner Herb Simon, 87, who co-founded Simon Property with his late brother. The pair bought the team in 1983 for $10million.
Simon Property Group and Brookfield Asset Management bought JCPenney after store brass filed for Chapter 11 in May 2020. The chain closed down nearly 200 locations across the US during the initial months of the pandemic.
The closures left the 118-year-old chain with just over 600 stores – down from more than 1,110 in 2012. It also saw roughly 30,000 staffers lose their jobs.
Kohl’s, meanwhile, which is based in Wisconsin, put itself up for sale earlier this year at the behest of investors Macellum and Engine Capital, who accused the retailer’s board of ‘putting its thumb on the scale to keep Kohl’s mired in operational mediocrity.’
The shareholders also accused directors of squandering their credibility with shareholders, through secretive and confusing practices while trying to garner a sale.
