The two mall owners that currently own J.C. Penney—Simon Property Group and Brookfield Asset Management—have offered to pay $8.6 billion for Penney’s archrival Kohl’s Corp., according to a report in the New York Post citing unnamed sources.
The two discount department stores would be run as separate brands but would be brought under one roof, in an effort to streamline operating overhead and expenses, the report said. For instance, the two companies would produce private-label merchandise by the same in-house label, and it would have a single information technology department.
The new owners hope to slash $1 billion in costs from Kohl’s over the next three years, the report said.
The companies could not be reached for comment.
On March 21, Kohl’s, under pressure from activist investors, announced it had received several “expressions of interest” in buying the company, and enlisted Goldman Sachs to coordinate with select bidders.
Other reported suitors: Hudson’s Bay, the Canadian conglomerate that owns Saks Fifth Avenue (and whose parent company, NRDC Equity Partners, formerly owned Lord & Taylor, Gilt Groupe, and Fortunoff), and private equity firms Sycamore Partners and Leonard Green & Partners.
The proposed buyout was greeted with skepticism by retail analysts.
“Given J.C. Penney is as bad as it ever was and evidence of a turnaround is scant to nonexistent, I think it would be wise for Simon and Brookfield to focus on fixing what they already have,” Neil Sanders, managing director, GlobalData, wrote on RetailWire. “There probably would probably be some cost synergies…but this is absolutely not the solution to the problems either brand faces.”
Added Dick Seesel, president of Retailing in Focus: “…recent retail history suggests that acquisitions of stronger companies by weaker ones do not work out well for either brand.”
Simon Property and Brookfield bought J.C. Penney in 2020, after the department store filed for Chapter 11 earlier that year.
(Photo courtesy of Kohl’s)
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