Jun 20, 2019
Sycamore Partners lowers Chico's offer to $350 million
Jun 20, 2019
Chico’s FAS, Inc said on Wednesday it plans to review a new buyout offer from private equity firm Sycamore Partners that lowered an earlier unsolicited offer.
Sycamore disclosed in a regulatory filing on Wednesday that it had lowered its offer for Chico’s to $350 million in cash because of the U.S. women’s apparel retailer’s deteriorating financial performance.
It was the second time Sycamore lowered its bid this year. Last month Chico’s rejected an offer from Sycamore for $3.50 per share after previously having turned down a higher offer of $4.30 per share.
Since then, Chico’s reported a drop in quarterly cash flow and lowered its earnings outlook for the year. Sycamore’s latest offer is for $3 per share. Chico’s stock rose 2.3% to $3.18 on Wednesday.
Chico’s noted that the company board had unanimously rejected the first bid after determining the proposal substantially undervalued the firm and was not in the best interests of shareholders.
“Numerous Chico’s FAS shareholders have expressed to management that they support the Board’s previous decision to reject Sycamore’s proposal and share the view that Sycamore’s proposal is inadequate,” a statement from the company said on Wednesday.
Among the Chico’s shareholders backing management’s stance on the bid is fund manager Neuberger Berman, according to people familiar with the matter.
Sycamore said it may improve the offer, but only if due diligence could show Chico’s turnaround efforts were achievable.
© Thomson Reuters 2020 All rights reserved.