Sycamore Partners had agreed in February to acquire 55% of the company
Shares of L Brands fell sharply after Bloomberg reported that Sycamore Partners is seeking to terminate its agreement with the company regarding the Victoria’s Secret brand.
Bloomberg cites a court complaint filed by Sycamore in a Delaware court.
On February 20, L Brands and Sycamore Partners, a private equity firm specializing in consumer and retail investments, announced a strategic transaction that would position Bath & Body Works as a standalone public company and separate Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK into a privately-held entity.
Sycamore Partners is seeking to terminate its agreement to acquire a controlling stake in Victoria’s Secret from L Brands, Bloomberg’s Ed Hammond and Elizabeth Fournier report, citing a court filing. Sycamore in February had agreed to purchase 55% of the lingerie chain and take it private, leaving L Brands with a minority interest, the authors note.
Before the pandemic disrupted the U.S. retail sector, Victoria’s Secret was struggling with plunging sales, and all of its U.S. retail locations are currently closed, the authors say.
Victoria’s Secret’s sales had been slowing for years , as the company wrestled with changing consumers tastes and how its customers shopper.
L Brands, Inc. (LB) today announced that Sycamore Partners delivered a notice on April 22, 2020 purporting to terminate the Feb. 20, 2020 transaction agreement (“Transaction Agreement”) relating to the sale of a 55% interest in Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK (collectively, Victoria’s Secret) announced on Feb. 20, 2020.
Sycamore Partners also filed a lawsuit in the Court of Chancery of the State of Delaware on April 22, 2020 seeking a declaratory judgment that its termination of the Transaction Agreement is valid.
L Brands believes that Sycamore Partners’ purported termination of the Transaction Agreement is invalid. L Brands will vigorously defend the lawsuit and pursue all legal remedies to enforce its contractual rights, including the right of specific performance.
L Brands intends to continue working towards closing the transactions contemplated by the Transaction Agreement.
LB is down 21% to $9.57.
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