SPG Simon Property Group Inc

By Soma Biswas 

A battle is brewing for control of Brooks Brothers Group Inc., with at least two apparel ventures looking to take over the bankrupt clothing retailer, according to people familiar with the matter.

Sparc Group LLC, an apparel company backed by Authentic Brands Group LLC and mall owner Simon Property Group Inc., is considering bidding to buy Brooks Brothers out of bankruptcy, these people said.

WHP Global Inc., which has agreed to finance Brooks Brothers during its bankruptcy, is also crafting a buyout offer, according to people familiar with the matter.

Brooks Brothers filed for bankruptcy on Wednesday after two centuries in business, unable to withstand the coronavirus pandemic and the forced shutdown of retail shopping. The company, which struggled in recent years with a shift toward more casual dress styles at work, will soon start a formal process to field offers.

Both potential bidders are planning to keep most Brooks Brothers stores intact, betting that the retailer's survival is tied to a strong brick-and-mortar presence, according to people familiar with the matter.

WHP, founded in 2018 with backing from Oaktree Capital Management LP, is looking to add Brooks Brothers to its portfolio after buying the Joseph Abboud and Anne Klein brands from struggling parent companies.

Authentic Brands Group has been buying up brands for a decade. The firm teamed up with Saks Fifth Avenue parent Hudson's Bay Co. to buy the Barney's brand out of bankruptcy last year. Sparc, the venture Authentic formed with Simon Property, last week proposed a deal to buy clothing retailer Lucky Brand Dungarees LLC out of bankruptcy. Sparc also owns hundreds of Aéropostale, Forever 21 and Nautica stores.

The possible bidders are also competing behind the scenes to supply the financing needed to carry Brooks Brothers through bankruptcy, the people also said. The company has signed on to a $75 million loan from WHP, but Sparc is in talks with Brooks Brothers to offer a bigger loan, they said.

A Brooks Brothers spokeswoman declined to comment.

Neither loan can be finalized until it is approved in the U.S. Bankruptcy Court in Wilmington, Del., where Brooks Brothers is scheduled to make its debut appearance Friday.

WHP's proposed loan to Brooks Brothers would give it collateral rights over the company's brand name and trademarks, ensuring that even if Brooks Brothers ends up liquidating, WHP would gain control over the intellectual property.

Under the conditions offered by WHP, Brooks Brothers would need to sell itself by Sept. 14.

Write to Soma Biswas at soma.biswas@wsj.com

(END) Dow Jones Newswires

July 09, 2020 19:21 ET (23:21 GMT)

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