By Dana Mattioli And Gillian Tan
Private-equity firm Sycamore Partners is in advanced talks to
buy women's apparel retailer Chico's FAS Inc., according to people
familiar with the matter, in what could be the largest leveraged
buyout so far this year.
New York-based Sycamore was recently seeking financing for a
buyout of Chico's, indicating a deal could be close, according to
one of the people. There is no guarantee there will be a deal,
however, or that another firm won't ultimately buy Chico's instead.
Another deal Sycamore was recently negotiating fell apart because
the buyout firm had trouble lining up funding on acceptable
terms.
Chico's had a market capitalization of $2.65 billion at
Tuesday's close, meaning that with a typical takeover premium, the
company could be valued at more than $3 billion. There hasn't been
an LBO even close to that size so far this year, according to
Dealogic.
Sizable leveraged buyouts--especially of public companies like
Chico's--have been few and far between in recent years. Even though
cheap financing has been plentiful, the rising stock market in many
cases has put company valuations out of the reach of private-equity
firms. Last year, there were just $23 billion in private-equity
buyouts of public companies in the U.S., according to Dealogic.
Still, there have been exceptions. In December, a consortium led
by BC Partners agreed to buy another public retailer, PetSmart Inc.
for about $8.2 billion.
Chico's shares fell slightly in regular trading Tuesday, to
$17.25. They have risen just 1% in the past year despite
long-running speculation that the company would be sold.
In addition to its namesake stores, which tend to cater to older
women, Chico's has other brands including White House Black Market,
lingerie label Soma, and online and catalog retailer Boston Proper.
Across its brands, the Fort Myers, Fla., company has more than
1,550 stores throughout the U.S. and Canada, according to its
website.
In the quarter ending Nov. 1, Chico's reported sales of $665.6
million and earnings of $26.5 million.
Sycamore has been active in the retail sector of late. Last
year, it took Jones Group private in a $1.2 billion deal, and last
month it agreed to sell shoe company Stuart Weitzman to Coach
Inc.
But in January, Express Inc., a retailer that focuses on young
adults, said it ended buyout talks with Sycamore after several
months, citing the private-equity firm's inability to find
acceptable financing for a deal.
Write to Dana Mattioli at dana.mattioli@wsj.com and Gillian Tan
at gillian.tan@wsj.com
Access Investor Kit for Chico's FAS, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US1686151028
Access Investor Kit for Coach, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US1897541041
Access Investor Kit for Express, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US30219E1038
Access Investor Kit for PetSmart, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7167681060
Subscribe to WSJ: http://online.wsj.com?mod=djnwires