UPDATE 4-Sycamore considering buying Talbots-WSJ

Mon Aug 1, 2011 7:48pm EDT

* Sycamore says intends to talk to Talbots management

* Shares up 18 pct (Rewrites first paragraph to say that Sycamore co-founder is considering the possibility of acquiring Talbots, according to WSJ)

BANGALORE Aug 1 (Reuters) - Private equity firm Sycamore Partners' co-founder is considering the possibility of acquiring women's clothing retailer Talbots Inc TLB.N, the Wall Street Journal reported, citing people familiar with the matter.

Sycamore Partners and Talbots did not immediately respond to phone calls seeking comment.

Sycamore Partners, started by retail industry veteran Stefan Kaluzny, reported a 9.90 percent stake in Talbots, according to a filing with the U.S. Securities and Exchange Commission.

Shares of Talbots rose about 18 percent to close at $4.07 on Monday on the New York Stock Exchange.

Talbots, which built its image on its traditional pearls-and-classics fashions, has seen its sales fall over the past 5 years.

The company's shares have lost more than 80 percent of their value over the same period, including about 60 percent this year, and some investors have said it may soon be time for a change in management, or even a sale, if things don't improve. [ID:nL3E7I62L2]

Sycamore Partners said Talbot's stock was undervalued, and it expects to talk to the retailer's management and other shareholders regarding the company's operations and strategy, among other things, according to the filing.

The stock trades at 1.7 times book value, 65 percent cheaper than its peer group, according to Thomson Reuters StarMine data.

Sycamore and its affiliates become the second biggest shareholders in Talbots, after OppenheimerFunds, which holds a 13.27 percent stake, according to Reuters data.

Kaluzny is a former Golden Gate Capital Managing director.

Kaluzny, who specialized in retail at Golden Gate, serves as a director at a number of retailers including Zale Corp ZLC.N, Apogee Retail and Eddie Bauer Inc [GOLGCU.UL] (Reporting by Mihir Dalal in Bangalore, additional reporting by Divya Sharma; Editing by Prem Udayabhanu, Saumyadeb Chakrabarty and Carol Bishopric)

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