Sycamore to take Talbots private for $193 million

Thu May 31, 2012 8:55am EDT

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(Reuters) - Women's apparel retailer Talbots Inc TLB.N, struggling with declining sales and high debt, will be bought by longtime suitor Sycamore Partners for $193.3 million, a price that is slightly lower than the private equity firm's previous offers.

Sycamore, which is Talbots' second-largest shareholder, will pay $2.75 per share, representing a premium of 113 percent to the stock's close on Wednesday.

Talbots rejected a $212 million buyout proposal from Sycamore in December but allowed the private equity firm to look at its books in January as its business continued to deteriorate.

Following months of discussions, Sycamore raised its offer to $214.6 million in early May but Talbots announced on Friday that the talks had ended without a merger agreement, which sent its shares plunging 41 percent.

The retailer, which built its reputation on traditional pearls-and-classics fashions, has seen its sales fall for five straight years as shoppers instead flocked to Ann Inc (ANN.N) - owner of Ann Taylor and Loft stores - and Chico's FAS Inc (CHS.N).

Efforts by Talbots to reach out to younger shoppers also failed and alienated its core shoppers, women over the age of 35.

Talbots' business had declined so sharply that some even questioned if the retailer would have enough cash to operate beyond the next 12 months.

The company said on Thursday it agreed to a buyout by Sycamore in a deal valued at about $369 million, including debt.

(Reporting by Mihir Dalal in Bangalore; Editing by Saumyadeb Chakrabarty, Maju Samuel)

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Comments (2)
Lucas_Jackson wrote:
Sycamore played the management team, board and financial adviser like a fiddle by backing out, letting the price plummet and then reconfirming interest. Sycamore’s tactics along with Talbot’s misread of the situation effectively transferred $21 million dollars of shareholder value to the potential purchaser. Well played Sycamore. As for the Trudy and her board… I really really hope, for the shareholders sake, you are not congratulating each other for this disaster. We hope you don’t pop up anywhere else to suck shareholder value out of an otherwise good company. Watching management’s strategy on this transaction was akin to watching Kim Kardashian try to play chess against Garry Kasparov. Also, where were the advisors? Asleep on the beach in Cape Cod? Who was there with management to walk through the valuation? Was one even done? I’d love an answer on how this negative EBITDA company had more than $3 a share of value????

Oh boy, get ready for Sycamore to fire up the chainsaws in Hingham… it’ll be fun watching this management team get run out of town… oh ya, and the board too.

May 31, 2012 5:02pm EDT  --  Report as abuse
Lucas_Jackson wrote:
Sycamore played the management team, board and financial adviser like a fiddle by backing out, letting the price plummet and then reconfirming interest. Sycamore’s tactics along with Talbot’s misread of the situation effectively transferred $21 million dollars of shareholder value to the potential purchaser. Well played Sycamore. As for the Trudy and her board… I really really hope, for the shareholders sake, you are not congratulating each other for this disaster. We hope you don’t pop up anywhere else to suck shareholder value out of an otherwise good company. Watching management’s strategy on this transaction was akin to watching Kim Kardashian try to play chess against Garry Kasparov. Also, where were the advisors? Asleep on the beach in Cape Cod? Who was there with management to walk through the valuation? Was one even done? I’d love an answer on how this negative EBITDA company had more than $3 a share of value????

Oh boy, get ready for Sycamore to fire up the chainsaws in Hingham… it’ll be fun watching this management team get run out of town… oh ya, and the board too.

May 31, 2012 5:02pm EDT  --  Report as abuse
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