L Brands (LB) - Get Report said Tuesday that it plans to separate Victoria's Secret and Bath & Body Works into two publicly-traded companies after receiving "multiple potential buyers" for the iconic lingerie group.
Victoria's Secret will be run by CEO Martin Waters, while L Brands CEO Andrew Meslow will lead Bath & Body Works, the company said, with plans to complete the tax-free separation by August of this year. The New York Times 'DealBook' reported that L Brands had received offers higher than $3 billion for Victoria's Secret, but expects a spin-off value approaching $7 billion from its planned transaction.
Victoria's Secret had March quarter sales of $1.55 billion, around half of the L Brands total of $3.024 billion, while Bath & Body Works had a topline of $1.469 billion.
“In the last ten months, we have made significant progress in the turnaround of the Victoria’s Secret business, implementing merchandise and marketing initiatives to drive top line growth, as well as executing on a series of cost reduction actions, which together have dramatically increased profitability,” said L Brands chairman Sarah Nash.
“As a result of these efforts, Victoria’s Secret is now well-positioned to operate as a standalone, public company. Further, both Bath & Body Works and Victoria’s Secret are leaders in their respective markets, and, as separate businesses, each will be ideally positioned to benefit from a sharpened focus on pursuing growth strategies best suited to each company’s customer base and strategic objectives."
"With this in mind, the Board believes that this path forward will return the highest value to shareholders and that the separation will allow each business to achieve its best opportunities for growth,” she added.
L Brands shares were marked 4.1% lower in pre-market trading immediately following news of the separation to indicate an opening bell price of $66.00 each.