NEW YORK — Eddie Bauer Holdings Inc. appears to be on a fast track to be sold.
The specialty retailer has hired Goldman Sachs as financial adviser to help it explore options for a sale. A spokeswoman for Eddie Bauer declined comment, as did a spokesman from Goldman Sachs. In January, WWD reported that several strategic and financial firms were looking to buy the retailer.
Late last week, financial sources close to companies said to be interested in bidding for Eddie Bauer said they expected offers for the retailer to be submitted before a May 1 refiling of the company’s registration statement with the Securities and Exchange Commission. The potential bidders include strategic and private equity firms.
One banking source explained that a bid before the filing date would effectively “slow” the process of public trading of Eddie Bauer shares, and prevent new shareholders from having a say in the sale. The company’s shares trade over the counter, and the registration filing would allow them to trade on the Nasdaq.
Another financial source familiar with the potential timing of a bid for Eddie Bauer said the current share price, which is in the $12 to $13 range, would be attractive to potential bidders. The stock was trading between $13 and $14 in January, and dropped to $10 earlier this month. The source noted that if shares of Eddie Bauer climb, the retailer “looks like a turnaround story.” But the price per share a bidder would be required to pay would then be “too high,” considering the company’s underlying fundamentals, such as operating margins.
In January, WWD reported that VF Corp., Liz Claiborne, Kohlberg Kravis Roberts & Co. and Texas Pacific Group were interested in making a bid for Eddie Bauer. Of the four, VF was said to be “very interested.” KKR has bid before for Eddie Bauer, but was rebuffed by former parent Spiegel’s creditor constituency during the catalogue retailer’s bankruptcy.
The Eddie Bauer spokeswoman said the company is finalizing the refiling of its Form 10 registration statement. The original filing of the Form 10-12G, which would allow shares of the company to trade on the Nasdaq once approved, was pulled in January. The corrected copy must be filed with the SEC by May 1. The spokeswoman said the SEC review takes 60 days.
This story first appeared in the April 24, 2006 issue of WWD. Subscribe Today.
Goldman Sachs, the Wall Street powerhouse, has been busy in the retail sector over the past few months. Earlier this month, BCBG hired the firm to advise it through an initial public offering. In late March, Jones Apparel Group said it hired Goldman Sachs to help explore a sale. Earlier in the year, Goldman Sachs was retained by Federated Department Stores to help Federated sell its Lord & Taylor chain, was hired by Saks Inc. to help that retailer sell its Parisian unit and advised Burlington Coat Factory when Burlington put itself on the auction block, which resulted in a sale to private equity investors.
Eddie Bauer was founded in 1920 in Seattle. The 399-unit chain caters to men and women ages 35 to 54 with an average annual household income of $75,000, according to a regulatory filing earlier this year. Eddie Bauer distributes its merchandise through retail stores and outlets located in the U.S. and in Canada, and directly to consumers through catalogues and on its Web site. The company has a workforce of about 524 at its corporate headquarters in Redmond, Wash.
The company, which exited bankruptcy proceedings in June 2005, has already issued 30 million shares to nearly 600 shareholders who primarily are owed $1.3 billion by Spiegel, Eddie Bauer’s parent during the bankruptcy. Holders include Commerzbank AG of Germany, Dresdner Kleinwort Wasserstein and DZ Bank AG.
Eddie Bauer does about $800 million in annual sales. At one point in 2000, sales were around $1.6 billion, but sales and store base have declined since then.