Thursday, December 8, 2011

Another Struggling Retailer to Be Purchased by PE Firm

If you pay attention to women's clothing retailers, you'll know that Talbots is struggling and has been doing so for some time. Their stock price keeps trending downward. Well, help may be on the way. According to TermSheet (that again!) Sycamore Partners, a private equity firm, "has offered to acquire struggling women’s retailer Talbots (NYSE: TLB) for $212 million. The $3 per share offer represents a 92% premium to yesterday’s closing price for Talbots". That means Sycamore Partners is offering nearly double what the stock has been trading at. Why would they do that?

Apparently, per TermSheet again, Sycamore already owns close to a 10% stake in Talbots. In order to induce the other shareholders, including large institutional and small individual investors but especially the former, to sell without incident or a fight, they have to pay what shareholders would consider a "fair" price. The things you have to do when you have many, many shareholders, some with serious clout.

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