Activists are pressing Coles to consider selling their online business, the report said.

During the coronavirus outbreak in San Francisco, California on September 5, 2020, people shop at Coles department stores.

Liu Sekiseki | Chugoku Shimbun | Getty Images

Following a similar move by department store chain Saks Fifth Avenue, the Wall Street Journal reports that activists are pressing Coles to consider either selling or separating its online business.

Engine Capital, a New York-based hedge fund, wants Coles to explore two options to raise its share price, the WSJ said. The activist group sent a letter to Cole’s board on Sunday, the report said. Engine Capital owns an approximately 1% stake in Coles.

Coles shares closed at $ 48.45 on Friday. This is where it was traded almost 10 years ago, with Coles having a market value of about $ 7.3 billion, lower than Macy’s and higher than Nordstrom. Cole’s share price has risen about 19% to date, below the S & P 500.

According to the WSJ, Engine Capital said in its letter that Coles’ digital business alone is worth $ 12.4 billion, assuming that Coles would generate about $ 6.2 billion in online sales revenue.

Engine Capital also believes that there are private equity firms that pay at least $ 75 per share, the report said. The group of investors also said that discussions with potential buyers could further monetize Cole’s real estate, the WSJ reported.

Coles and Engine Capital representatives did not immediately respond to CNBC’s request for comment.

These discussions arise when investors understand the appeal of owning part of a faster-growing e-commerce sector that operates a more tech-savvy business. Saks’ digital division is now reportedly aiming to publish at a valuation of $ 6 billion, or about six times its revenue. By March, it had a valuation of $ 2 billion.

Meanwhile, Macy’s was urged by activist group Jana Partners to spin off its e-commerce business from stores in the hope of gaining greater praise. Macy’s then hired consulting firm AlixPartners to review its business structure.

“We also recognize the significant value that the market is allocating to the pure e-commerce business,” Macy’s CEO Jeff Gennett said in a recent earnings call. “And looking at today’s situation, we’re doing additional analysis that could help with long-term strategies to further unleash the value of Macy’s.”

Coles recently clashed with activist investors, questioning the company’s direction and trying to dominate the board. A group of Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital reached an agreement with retailers in April, adding several investor-backed independent directors to the board.

In 2014, Engine Capital pressured Ann, who owns Ann Taylor and Loft fashion brands, to sell herself. The following year, the company did.

Read the full report from The Wall Street Journal here.

Activists are pressing Coles to consider selling their online business, the report said.

Source link Activists are pressing Coles to consider selling their online business, the report said.

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