Kohl's should reject buyout offers that endanger jobs in Wisconsin, says senator.

• A Wisconsin senator is calling on Kohl's to reject any buyout offers that could lead to a bankruptcy filing or jeopardize workers' jobs in the state.
• On Thursday, Kohl's board of directors received a letter from Sen. Tammy Baldwin, a Democrat, requesting that the company reject proposals that would lead to significantly increasing debt levels, divesting assets, or prioritizing shareholder payouts over reinvesting in the business.
• Kohl's received multiple preliminary offers from parties interested in acquiring the department store chain following a monthlong campaign from activists to consider a sale.

A senator from Wisconsin is urging Kohl's not to accept any buyout offers that could lead to a bankruptcy filing or jeopardize workers' jobs in the retailer's home state.

On Thursday, Kohl's board of directors received a letter from Sen. Tammy Baldwin, a Democrat, requesting that the company reject proposals that would lead to significantly increasing debt levels, divesting assets, or prioritizing shareholder payouts over reinvesting in the business.

In the letter, Baldwin urged caution in evaluating each proposal's long-term strategy and rejected any offers that posed a risk of bankruptcy, jeopardized the jobs and retirement security of thousands of Wisconsin workers, and involved a sale-leaseback.

Kohl's did not promptly respond to CNBC's inquiry for comment.

On Monday, after months of pressure from activists, Kohl's announced it had received multiple preliminary offers from potential buyers. Although Kohl's did not disclose the names of the bidders, a source close to the matter revealed that one offer came from Hudson's Bay Co., a Canadian-based retail conglomerate. Additionally, private equity firm Sycamore Partners is reportedly considering making a bid. However, representatives for HBC and Sycamore declined to comment.

Kohl's has rejected one offer from Acacia Research to acquire the business for $64 per share, as it deemed the deal too low. Since then, Kohl's has been working with Goldman Sachs to find other suitors and has engaged with over 20 parties. Kohl's shares opened at $61.67 on Friday, having increased by 24% year to date. The stock was down slightly in midday trading.

Private equity firms and hedge funds have been criticized for driving retailers into bankruptcy and leaving employees without jobs. A 2019 report from United for Respect found that over 1.3 million Americans lost their jobs in the past decade due to private equity ownership in retail, citing bankruptcies at Toys R Us and Sears as examples.

In her letter to Shopko, Baldwin highlighted the struggles of the Wisconsin-based retailer, which was acquired by Sun Capital Partners in 2005 for $1.1 billion and ultimately filed for bankruptcy protection in 2019, resulting in liquidation.

Kohl's employees in Wisconsin may face job loss, as Baldwin warns of a possible repeat of Shopko's closure.

Kohl's employed around 99,000 individuals in 2021, including part-time workers during the holiday season. According to Baldwin, Kohl's employed approximately 8,000 people in Wisconsin.

"The senator stated that he comprehends the pressure being exerted on you by investment funds that have recently acquired significant stakes in Kohl's outstanding shares. He believes that the demand for capital to be returned through stock repurchases is a deceptive tactic that solely benefits short-term shareholders."

An annual meeting with shareholders is scheduled by Kohl's for May 11.

In a letter to shareholders dated March 21, Kohl's stated that although they have faith in their strategic plan, their board is evaluating it against other options. The board is dedicated to selecting the approach that they believe will generate the greatest value for shareholders.