In a regulatory filing with the Securities and Exchange Commission on Thursday after the market closed, the firm founded by Stefan Kaluzny said it had accumulated a 9.9% stake and said it wanted to proceed with due diligence to help it value the company for a buyout offer.
Express said in a statement its board had appointed a special committee to determine "a course of action it believes is in the best interest of all stockholders."
While that committee grapples with Sycamore's approach, the retailer passed a poison pill or a stockholder rights plan, causing significant dilution for anyone acquiring more than a 10% stake in Express.
The news of Sycamore's interest sent shares of Express up more than 20% in after-hours trading to $16.55 per share, giving it a market cap of nearly $1.4 billion based on a bit more than 84.2 million shares outstanding as of May 31, the end of its fiscal first quarter, according to company filings. It had cash and cash equivalents of about $250 million and long-term debt of nearly $200 million, which would push the enterprise value up a bit over the $1.4 billion market cap, based on the stock price in after-hours trading.
A 20% to 30% premium over the unaffected stock price tends to be a rule of thumb for retail buyouts. But there have been past instances where the premium can go much higher. Men's Wearhouse (MW), for example, ended up buying Jos. A. Bank Clothiers (JOSB) at a 65% premium.