Sycamore Partners’ rescue plan for troubled lingerie retailer L Brands is all but off with the two companies headed to court after the private-equity company unilaterally canceled the bid.
Sycamore agreed to pay US$525 million for a 55 percent stake in L Brands, the parent of Victoria’s Secret, back in February in a deal most analysts at the time considered a bargain. But the subsequent advent of the coronavirus pandemic which saw most of the company’s stores shuttered, decimating sales, has made L Brands even less desirable, even at that price.
On Wednesday, Sycamore notified L Brands it was terminating the deal, a move the target company described as “invalid”.
Sycamore is claiming that by closing stores, laying off staff and withholding rent, L Brands was in breach of the sale agreement under which the retailer was obliged to continue to conduct business ‘as usual’ ahead of settlement.
In a statement, L Brands said it would “vigorously defend the lawsuit and pursue all legal remedies to enforce its contractual rights, including the right of specific performance”.
L Brands’ share price took a 20-per-cent hit in the wake of Sycamore’s actions.