Sycamore Partners is stepping up pressure on Chico’s FAS to act on its takeover offer and is now seeking to engage shareholders in the process.
On Friday, Stefan Kaluzny, managing director of the Sycamore Partners private equity firm, sent a letter to David F. Walker, chairman of Chico’s, requesting that the company call a special meeting of shareholders within 50 days in accordance with statute 607.0902 of the Florida Business Corporation Act.
“As we have previously stated, we are simply seeking due diligence access to the company so that we can provide you, the board of directors, and our fellow shareholders a binding, unconditional acquisition offer for all to consider,” Kaluzny wrote.
In response, a Chico’s spokesperson said, “We note the request, are reviewing it and will respond in due course. As stated in Sycamore’s letter, this is a request related solely to whether Sycamore has certain voting rights; it does not speak to the merits of, or otherwise advance, Sycamore’s unsolicited acquisition proposal.”
But asource close to the situation told WWD that so far, Chico’s has not engaged with Sycamore at all, and noted that Chico’s board indicated in a press release earlier this year that shareholders support the company’s turnaround plans. Sycamore, the source said, in effect, would be questioning that contention, by requesting a shareholders’ meeting.
The turnaround plan began in January, when the Fort Myers, Fla.-based company announced it would close 250 stores over the next three years, strive to improve products and service, and renew a focus on digital operations.
“The shareholder meeting doesn’t mean they would be approving the offer, but it would determine whether they (shareholders) wanted the board to engage with Sycamore or not,” said the source.
Sycamore has made three offers to buy Chico’s, initially for $4.30 a share, then $3.50, and most recently $3. The private equity firm reduced the offer twice in light of growing indications that the company was experiencing hardship. In April, Shelley Broader resigned as Chico’s president and chief executive officer and Bonnie Brooks, former vice chair, president and ceo of Hudson’s Bay Co., was named interim ceo of Chico’s. Brooks was already on the Chico’s board.
Florida Law provides that anyone who has an intention of buying more than 50 percent of a company can request the board to call a meeting of the shareholders.