by DELAWARE, Ohio — Franchise Group, the parent of American Freight, Badcock Home Furniture & more and Buddy’s Home Furnishings, said it has entered into a three week exclusive negotiation period to acquire Kohl’s Corp, for $60.00 per share in cash.
If the two reach a definitive agreement, Franchise Group said it intends to contribute about $1 billion to the transaction, “all of which is expected to be funded through a corresponding increase in the size of its secured debt facilities.” A majority of the financing is anticipated to be provided on the basis of Kohl’s real estate assets, it said. Other than the increased secured debt facilities of Franchise Group, none of the financing is expected to be recourse to Franchise Group.
The company said it remains committed to its “conservative financial policies, including target leverage levels, and maximizing free cash flow generation.”
“If a transaction is completed, it is anticipated that the free cash flow, adjusted EBITDA and Non-GAAP EPS of Franchise Group would significantly increase. The significant increase in free cash flow generation is expected to further Franchise Group’s objective of increasing dividends and other capital return to shareholders, while also enabling Franchise Group to accelerate continued organic and inorganic investments.”
Franchise Group said it doesn’t intend to make additional comments on the negotiations, “unless and until it is appropriate to do so, or a formal agreement has been reached or transaction discussions are terminated.”
