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Golden Gate Wins Eddie Bauer

Private equity firm Golden Gate Capital has emerged as the winner in the race to snatch up Eddie Bauer Holdings Inc. with a $286 million cash bid.

The second time proved to be the charm for Golden Gate Capital, which won the bidding for bankrupt Eddie Bauer Holdings Inc.

The private equity firm made an all-cash bid of $286 million. A Delaware bankruptcy court hearing to approve the sale is set for Wednesday. The transaction is expected to close in early August.

Golden Gate and affiliates of Sun Capital Partners made an unsuccessful $286 million bid for the retailer of outdoor-oriented apparel and gear in February 2007, but it was rejected by shareholders.

However, Eddie Bauer filed for bankruptcy last month.

Cathy Hershcopf of Cooley Godward Kronish, which represents the unsecured creditors in the case, said she is “hopeful that there will be some small distribution” to them. But unsecured claims were still being determined and negotiations with Bauer’s term lenders were continuing. Stockholders aren’t expected to receive anything.

The company said the Golden Gate offer will allow the “substantial majority” of Bauer’s 371 stores to remain in operation as part of a newly formed company and the bulk of its employees to keep their jobs. As of Jan. 3, the Bauer employed 1,086 full-time and 6,341 part-time associates.

The firm declined comment on the status of president and chief executive officer Neil Fiske.

Golden Gate outbid competitors such as stalking horse bidder CCMP Capital Advisors; Iconix Brand Group, which entered the fray in tandem with a strategic partner; several liquidation firms, and VF Corp., which bid just on the intellectual property assets.

Before the unsuccessful 2007 bid by Golden Gate and Sun Capital, the retailer became a stand-alone publicly held firm in 2005 as part of the reorganization of former parent Spiegel Inc., which filed for Chapter 11 in 2003. Spiegel’s Spiegel and Newport News operations were acquired by Golden Gate in 2004.

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 has 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 and said last month it will acquire the J. Jill brand from The Talbots Inc. for $75 million.

In addition to its stores in the U.S. and Canada, Bauer sells through catalogues and its Web site at eddiebauer.com. According to its 2008 annual report, its Web site received 33.9 million visits and it distributed 77 million catalogues last year.

Sales for 2008 were $971.3 million, a 1.8 percent drop from 2007.

Bauer reported that its loss for the first quarter ended April 4 widened to $44.5 million from a $19.3 million loss in the year-ago period. Sales fell 15.7 percent to $179.8 million from $213.2 million. Same-store sales were down 11.3 percent.

Now based in Bellevue, Wash., the company was founded by Eddie Bauer in Seattle in 1920 and was renowned for outfitting mountaineering expeditions. The company entered the catalogue business in 1945 and was acquired by General Mills Inc. in 1971. Eddie Bauer didn’t open its first store outside Seattle until 1972, when it entered the San Francisco market.