Sycamore Partners, the private equity firm that took a 9.9 percent stake in The Talbots Inc., has offered $186.8 million in cash to buy the remaining shares it doesn’t own to preserve its investment.
In a letter dated Dec. 6 to Gary M. Pfeiffer, the chairman of Talbots’ board, the private equity firm expressed concerns about Talbots’ “current condition and future direction.” The letter was made public in a regulatory filing Tuesday with the Securities and Exchange Commission.
The letter said the cash offer at $3 a share “represents a premium of 92 percent to the closing stock price of $1.56” on Tuesday.
There were 69.1 million shares outstanding for the third quarter ended Oct. 29, of which Sycamore needs to acquire 62.3 million shares, or 90.1 percent of the balance of shares it doesn’t already own. At $3 a share, that would place Sycamore’s valuation of Talbots, including the 9.9 percent stake it owns, at $207.3 million. The current market capitalization of Talbots is $107.8 million, based on Tuesday’s closing price. Shares of Talbots rose 68.6 percent, or $1.07, to $2.63 in after-market trading shortly following the disclosure of the SEC filing.
Sycamore in the letter noted that Talbots announced the retirement of chief executive officer Trudy F. Sullivan “without identifying a suitable replacement,” and that the firm dismissed its chief creative officer, Michael Smaldone, and “failed to hire a replacement.” Smaldone left in September.
Sycamore also noted the multiyear decline of the stock price, as well as liquidity concerns given that the company “ended the third quarter with $19.3 million in cash, that it had used $124.9 million of its $200 million revolver and had added trade payable financing through Li & Fung of $39.4 million.”
“Given the company’s rapidly deteriorating situation during the critical holiday shopping season, we believe expeditious action is needed to protect shareholders’ investment in Talbots,” Sycamore said, noting the reason it was making its offer.
The private equity firm also said if the board were to provide it with access to information, “we could potentially get to a position where we would consider increasing our offer for the company.”
The offer requires approval of the board and shareholders.
Sycamore said it had a meeting with the firm’s ceo and chief financial officer several weeks ago, but that the board has since “rebuffed our efforts” for further discussions.
Talbots on Dec. 1 said, for the third quarter ended Oct. 29, it lost $22 million, or 32 cents a share, against income of $17 million, or 24 cents, a year ago. Excluding special items of $6.6 million for costs such as restructuring charges and impairment of store assets, the adjusted loss from continuing operations was $15.5 million, or 22 cents a share, against income of $18.7 million, or 27 cents, last year. Sales fell 6.6 percent to $279.5 million from $299.1 million, with consolidated comparable-store sales falling 4 percent.
The company also announced a cost-reduction plan for next year.
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews