VF Corp. has jumped into the bidding for bankrupt Eddie Bauer Holdings Inc. as the auction of the retailer’s assets nears on Thursday.
The 89-year-old Bauer’s positioning as an outdoor outfitter could provide a good match for VF, whose portfolio of outdoor labels includes The North Face, Napapijri and accessories specialists Kipling, JanSport, Eastpak and Eagle Creek. It would also add substantially to VF’s retail footprint. At the end of 2008, VF operated 698 stores around the world, including 74 outlets, and its stores accounted for 16 percent of company revenues, or about $1.22 billion.
VF notified the Delaware bankruptcy court overseeing the Bauer case on Monday that it is a “party in interest” and asked to receive all documents pertaining to the case.
The roster of contenders for Eddie Bauer also includes a combination of Iconix Brand Group Inc. and a strategic retail partner that was not immediately identified. Sources familiar with the auction process said Iconix would be responsible for the brand management, its main area of expertise, and the retail partner would operate the 371 stores. In addition, Iconix could later partner with a liquidator to sell off the assets, including leases to stores it doesn’t want, the sources said.
Spokeswomen for VF and Iconix declined comment.
Bauer filed its Chapter 11 petition on June 16, and as part of its filing entered into a stalking-horse purchase agreement with CCMP Capital Advisors LLC for $202 million in cash, with adjustments for working capital and other considerations. CCMP is a buyout firm that once included Cabela’s, Crosstown Traders and Cornerstone Brands in its portfolio.
Sources said VF and Iconix, believed to be the only two strategic buyers, will face intense competition from CCMP, an affiliate of Rainier Holdings, and private equity firm Golden Gate Capital.
Golden Gate Capital has long held an interest in Bauer and acquired its brother divisions, Spiegel and Newport News, after the post-bankruptcy reorganization of former parent Spiegel Brands Inc. in 2005. Bauer became a stand-alone firm and went public, but shareholders in February 2007 rejected a deal to be acquired by affiliates of Sun Capital Partners Inc. and Golden Gate for $286 million.
Golden Gate has been particularly active in acquiring companies that, like Spiegel and Bauer, have substantial direct-to-consumer operations. In recent years, the firm acquired Haband, Appleseed’s, The Tog Shop, Draper’s & Damon’s, Sahalie and Norm Thompson. It also has a significant retail operation through its acquisition of Express.
Other financial buyers said to be interested in the chain include liquidation firms Gordon Brothers and Hilco Consumer Capital, which are said to be planning a joint bid.
On Thursday the parties will have the opportunity to bid for either all of the assets as a going concern or just a portion of them. A hearing is set for July 22 to approve the buyer selected at auction.
Bauer, which saw its 2008 sales decline 1.8 percent to $971.3 million, is still considered one of the iconic names in outdoor and leisure apparel.
Sources connected to the bidding process said they expect Bauer will likely be acquired by a buyer that would keep the retailer in operation.
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