This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sycamore Walks Away From Talbots Buyout

NEW YORK ( TheStreet) -- Private equity firm Sycamore Partners has walked away from a second buyout offer for struggling woman's retailer Talbots (TLB), after two bids and a half-year tussle didn't get it very far.

On Friday, Sycamore let its $3.05 a share bid for Talbots, worth roughly $215 million, expire after it had already upped a previous all-cash bid and extended deadlines for the Hingham, Mass-based retailer. Talbots shares plunged in early Friday trading by as much as 35%. It mattered little that the company, which has struggled to meet sales goals, reported a first quarter profit of 2 cents a share on better than forecast revenue on Friday, beating estimates of a loss and marking a return to profitability after a loss-making 2011.

Talbots will now consider a new buyer, while it also cuts stores and searches for a new CEO. Talbots said it remains open to a deal, but the exclusivity agreement on Sycamore's May 5 bid has expired, allowing the women's retailer that caters to the baby boomer generation seek other buyers. Talbots said it was still considering the offer so long as details are hammered out on the deal's closing and financing.

In January, shares of Talbots (TLB) surged after CNBC reported that private equity firms Golden Gate Capital and TPG Capital were interested in buying the struggling retailer after Sycamore's initial $3 bid got it nowhere. Just days later, Sycamore returned with a new buyout offer.

In December, Talbots rejected Sycamore Partners $3 a share cash bid, saying that it was "inadequate and substantially undervalues the company." At the time of its bid, Sycamore owned 9% of Talbot's shares and was willing to pay a 92% premium. Talbots subsequently put itself up for sale and opened its books to Sycamore in on Jan. 30, prompting a new bid valued at $3.05.

Shares of the women's retailer fell as low as $1.65 in early Friday trading. Talbots fell nearly 70% in 2011 after its quarterly losses accelerated. The Friday morning share mark is Talbot's lowest trading level since Sycamore Partners emerged as a takeover bidder.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Since opening exclusivity agreements with Sycamore, Talbots has reported a string of negative earnings results.

In Friday's earnings report, Talbots first quarter revenue of $275.9 million was a drop of 8.4%, and a profit of $1.2 million, or two cents per share. The numbers reflected better-than-guided revenue and a profit instead of an expectation of a two-cent per share loss, according analysts polled by Zacks. The earnings and revenue declined from year-ago-levels as the company cuts its store count and reports falling same store sales.

"We are pleased to have achieved profitability in the first quarter, driven by improved merchandise margin compared to the prior year period as well as strong inventory and expense management," said CEO Trudy Sullivan. In December, Talbots announced that it's started a search for a successor to Sullivan who is set to retire.

Since March 2011, Talbots said it has closed 74 stores, ending the first quarter with 516 total stores. Still, the company said comparable store sales, which exclude recently closed stores, fell 2.2% in the quarter compared to year-ago levels.

For more on Talbots, see 6 retailers banking on a new CEO in 2012.

See why the Gores Group is slamming the brakes on a Pep Boys (PBY) buyout for more on troubled private equity bids.

-- Written by Antoine Gara in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TLB $0.00 0.00%
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs