Dive Brief:

• Kohl's on Monday acknowledged "that it has received letters expressing interest" in taking it over, following reports over the weekend that two financial firms are preparing bids. The department store's board is mulling what to do, with no action needed from shareholders yet, per the press release.

• Acacia Research, owned by activist firm Starboard Value, has offered $9 billion, reflecting a 37% premium over Kohl's share price, the Wall Street Journal reported Friday. Private equity firm Sycamore Partners is also interested, according to news reports Sunday.

• Sycamore, which runs several retailers, declined to comment. Acacia didn't immediately respond to a request for comment. "Kohl's does not intend to further comment publicly on these matters unless it determines it is in the best interests of shareholders to do so," the retailer said in its release.

Dive Insight:

Kohl's has been under pressure to shake up its operations — split off its e-commerce or sell itself or its property — since at least December. That's when hedge fund Engine Capital, which owns 1% of Kohl's shares, urged the department store to "publicly commit to conducting a full review of strategic alternatives," including those options.

Then, last week, Macellum Advisors, which owns nearly 5% of shares, called for a board shakeup, real estate divestment and expansion of stock buybacks. That firm also suggested that Kohl's consider "breaking out" its e-commerce segment, though later wouldn't comment on whether that would mean spinning off digital operations into a separate company. Macellum also said that Kohl's should put itself up for sale if the board isn't revamped.

But the push for major changes at Kohl's began nearly a year ago, when Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital, which together own a 9.3% stake, agitated for — and got —board changes that included installing board members approved by those firms.

With a sale looming as a real possibility, analysts are speculating on the likelihood it would go through, based on factors like Kohl's real estate holdings and turnaround prospects. UBS analysts led by Jay Sole threw cold water on the investment firms' ability to obtain financing for any takeover deal, citing weakness on both counts.

"We doubt Kohl's real estate has enough value to serve as adequate collateral," analysts wrote in a research note Monday, in which they estimate that the retailer's 409 stores average in value $6 million to $8 million. "We don't believe an operational turnaround plan exists which will convince creditors to lend enough capital to make the deal happen."

Kohl's may have a "few 'hidden gems'" among its holdings, but otherwise "our work suggest Kohl's owns few stores in high-value real estate markets, such as Manhattan," Sole said.

Moreover, once Kohl's sells its real estate, it has to pay rent to the new owners, Credit Suisse analyst Michael Binetti said on Monday. (This helped drain money from Sears during its long, slow decline.) Credit Suisse pegs Kohl's real estate value at $6.5 billion, and said that there's merit to the strategy if it's not taken too far.

Separating digital and brick-and-mortar operations and monetizing real estate this way both reflect "financial engineering at its finest," which isn't likely to help Kohl's long term, according to Nick Egelanian, president of retail development firm SiteWorks​. Several analysts in the real estate arena believe that Kohl's real estate does have unlocked real estate value, he said.

"If in the end the new owners were to monetize both the real estate and the internet operations, that would have the potential to allow the private equity investors to reduce their up front investment (perhaps to almost zero) by monetizing those two assets to fund all or part of the acquisition price," Egelanian said by email. "This would essentially be a leveraged buyout. The retail operating company would likely end up with much higher costs, and therefore weakened, but the investors would likely see much higher returns on invested capital."

Department stores in recent years have taken the brunt of this push to monetize real estate and, more recently, to split off their e-commerce, which several observers say reflects the weakness of that sector more broadly.