|Talbots gets an offer: |
Sycamore Makes Takeover Bid for Talbots
By PETER LATTMAN
New Yoek Times
December 6, 2011, 6:22 pm
6:56 p.m. | Updated
A private equity firm has proposed acquiring Talbots, in a deal that would value the struggling women’s retail chain at about $212 million, nearly double its market value at the close of regular trading on Tuesday.
In a letter to the Talbots chairman, Gary M. Pfeiffer, Sycamore Partners, which already owns 9.9 percent of the company, began a takeover bid and raised concerns about the retailers’ weak sales, according to a filing late Tuesday with the Securities and Exchange Commission.
“Given the company’s rapidly deteriorating situation during the critical holiday shopping season, we believe expeditious action is needed to protect shareholders’ investment in Talbots,” wrote Stefan Kaluzny, the head of Sycamore. “As a result, we are prepared to acquire all of the remaining issued and outstanding shares of Talbots not owned by us or our affiliates at a price of $3 per share in cash.”
Shares of Talbots, which closed Tuesday at $1.56, jumped to $2.70 in after-hours trading. The company’s stock had dropped more than 80 percent this year amid disappointing sales figures. Earlier this year, the company said it would close about one-fifth of its approximately 550 stores. On Monday, the company announced the retirement of its chief executive, Trudy Sullivan, without naming a replacement.
Talbots, which is based in Hingham, Mass., said in a statement that its board would evaluate Sycamore’s proposal.
In his letter, Mr. Kaluzny said that he and his partners had met with Talbots management several weeks ago, but that the company had since rebuffed Sycamore’s efforts to discuss a potential transaction.
Sycamore, a new firm focused on retail and consumer companies, was started this year by Mr. Kaluzny, a former partner at the private equity firm Golden Gate Capital. Mr. Kaluzny is a well-known retail investor; before forming Sycamore, he played a lead role in Golden Gate’s acquistion of the jewelry chain Zales.
In his letter, Mr. Kaluzny said that Sycamore was among the few acquirers with the “relevant experience, skills, interest and capital to invest in a struggling apparel company such as Talbots.”
“We believe that Talbots has significant potential and remains a premier, storied brand,” Mr. Kaluzny wrote. “We also believe, however, that the steps necessary to maximize the value of Talbots’ assets will require more aggressive action than has been taken to date and which would be extremely difficult to execute while remaining a public company.”
It is unclear whether Sycamore’s unsolicited offer will result in its purchase of the company. A number of retail chains have watched private equity investors acquire minority stakes in their companies and then offer to buy them outright.
In some cases, the private equity firm has consummated a deal. Leonard Green & Partners first took a small stake in BJ’s Wholesale Club last year before acquiring it with another buyout firm in June for $2.8 billion.
But some investors have failed to execute a takeover. Earlier this year, Family Dollar rejected an offer from Trian, the fund run by the financier Nelson Peltz, after it took a large stake in the company.