Macellum, which owns roughly 5% of Kohl's stock, sent the letter hours after Acacia Research Corp, backed by activist investor Starboard Value, on Monday confirmed an offer to buy the company for $64 a share, valuing Kohl's at roughly $9 billion.
In addition to Acacia's bid, Sycamore Partners is also preparing an all-cash offer for Kohl's at $65 per share, sources said on Sunday.
Kohl's shares surged 36% on Monday to close at $63.71.
"The best risk-adjusted path forward for shareholders right now is a credible and open process to evaluate a full sale of the company at an attractive premium," Macellum's managing partner Jonathan Duskin wrote. "Investors want an organized sales process."
He wants Kohl's to provide at least one unconditional board seat for a Macellum representative and to have that person lead a new committee that will oversee the review process, the letter said.
"We do not have faith in the current board to run this process on its own, nor do we believe the Board is capable of objectively evaluating possible bids," Duskin wrote.
A representative for Kohl's declined to address the Macellum letter directly on Tuesday and referred back to a statement from Monday which said the company will not make further public comment on expressions of interest unless "it is in the best interests of the shareholders."
Kohl's is exploring its options, including a possible sale, with advice from investment bank Goldman Sachs, two sources familiar with the matter said.
The people with knowledge of the matter declined to be identified because they were not permitted to discuss it publicly.
Pressure has been building on Kohl's since last week when Macellum said it planned to nominate directors to the board and wanted the company to consider a sale, and when Reuters reported that Acacia Research was preparing a bid for the company.
Duskin is ratcheting up that pressure less than a year after he and others reached a settlement that saw the company add three new directors.
He said in the letter reviewed by Reuters that he may take legal action or run another proxy contest if Kohl's board "chills" a sale process.
(Reporting by Svea Herbst-Bayliss; Editing by Kenneth Maxwell)
By Svea Herbst-Bayliss