By  on November 13, 2006

A sale of outdoor lifestyle retailer Eddie Bauer Holdings Inc. is said to be back on track, but financial sources said the company's retail operations could put off potential buyers.

Strategic players that have looked at the company, and passed, include VF Corp., Perry Ellis and Iconix Brand Group, according to sources. Financial buyers that have peeked at the retailer's books include Sun Capital Partners, Cerberus Capital Management and Bain Capital. Sun is said to have passed, while sources said Bain is tied up with the acquisition of Outback Steaks. Sources said the state of Bauer's retail operations was unattractive to potential bidders.

A spokeswoman for Bauer declined comment.

Another name said to be interested in Bauer is NexCen Brands. The firm is relatively unknown in fashion circles, but Robert D'Loren, its chief executive officer, is well known in the industry.

D'Loren sold his company, U.C.C. Capital, to Aether Holdings, which later was renamed NexCen Brands. U.C.C. is known for securitization deals involving intellectual property assets, such as Bill Blass and Candie's. U.C.C. was the former financial adviser to Iconix. Just last week, NexCen closed on its purchase of The Athlete's Foot.

A spokeswoman for NexCen declined comment, but said the "company is looking at a lot of deals.''

An industry executive who is familiar with Bauer's operations and the outdoor sector said Friday, "Bauer is still a good brand that people recognize." But other sources said the retailer is saddled with too many stores. One industry source said the company needed some fine-tuning, such as reworking the layout and footprint, and improving inventory management.

Bauer's manufacturing and retail operations do not exactly fit well with NexCen Brands' current strategy, which centers on franchise operations and licensing, but a deal is still doable, according to industry sources.

It's unclear how much the retailer would fetch. Six weeks ago, sources estimated Bauer's worth to be between $650 million and $750 million, including about $300 million in debt.

Fidelity Investments has several funds tied into Bauer with a combined stake of 12 percent. A financial source said Friday that Fidelity might not give shareholder approval unless a deal could be made for $12 per share, which is about $360 million, excluding debt.Bauer's shares closed Friday down 6.65 percent at $8.85.

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