Report: Simon Property, Brookfield offer to buy Kohl’s for more than $8.6B

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Simon Property Group Inc. and Brookfield Asset Management Inc. are offering to acquire retailer Kohl’s Corp. in a deal that would be worth more than $8.6 billion, according to a report in the New York Post.

Indianapolis-based Simon and Brookfield, which together bought rival department-store chain J.C. Penney Co. out of bankruptcy, have offered $68 a share, according to people with knowledge of the talks who the Post didn’t identify.

Shares of Kohl’s jumped as much as 4.5% on the news and were trading at $59.86 each Monday afternoon.

Simon Property shares were down 0.7%, to $125.05 each, and Brookfield shares fell 0.6%, to $65.30.

A Kohl’s spokesperson and an outside spokesperson for JCPenney didn’t immediately return messages seeking comment.

Kohl’s has been under pressure from activist investors including Macellum Capital Management, which is seeking to take control of the company’s board. The Menomonee Falls, Wisconsin-based retailer has engaged Goldman Sachs Group Inc. to field offers, saying that the firm is authorized to coordinate with select bidders.

Kohl’s said in March that Goldman had talked with more than 20 potential buyers. The retailer said in February that it had rejected takeover offers it had received as too low, including a $64-a-share offer from Acacia Research Corp., backed by hedge fund Starboard Value LP. The stock hasn’t traded above $65 in almost three years.

According to the New York Post, Simon and Brookfield would streamline operations at Kohls and cut costs by $1 billion over the next three years.

Simon, the country’s largest shopping mall owner, has veered into retailer ownership in a substantial way in recent years. Analysts say Simon has a vested interest in ensuring that its properties have a strong lineup of retailers that draw customers and that they don’t have too many anchor vacancies.

In addition to acquiring J.C. Penney, Simon and Brookfield were part of a team that acquired teen clothing chain Forever 21 out of bankruptcy in 2020.

Simon also teamed with Authentic Brands to acquire Aeropostale in 2016, Brooks Brothers and Lucky Brand Jeans in 2020, and Eddie Bauer in 2021.

Brookfield Asset Management is parent of Brookfield Properties, the second-largest U.S. shopping mall owner.

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4 thoughts on “Report: Simon Property, Brookfield offer to buy Kohl’s for more than $8.6B

  1. REITs have a legal limit on non-real estate income. If they exceed the limit, they can lose their REIT tax treatment. Kohl’s is large enough that it could cause a real problem. I wonder if Simon, will sooner rather than later, spin / sell off non-real estate assets.

    1. It is only 75%, though. So should not be an issue to be added into the portoflio and all their property values getting added into the REIT portion of the calculation