Private Equity Firms Make Bids for Talbots?

In Industry News, Reports, What's New by Jeff PrineLeave a Comment

Hingham, MA—Shares of Talbots have risen in price more than 20% following reports that Golden Gate Capital and TPG Capital, two private equity firms, are weighing bids to takeover the troubled specialty retailer.

Talbots usually trades an average volume of about 1.2 million shares a day, but that rose to 2.4 million shares earlier today.

The increased activity comes after CNBC broke the news on Friday that other equity firms plan to make bids on the company.

“That process is said to heat up in the coming weeks with various private equity and strategic parties taking a look,” said Kayla Tausche of CNBC.

Talbots’ advisor Perella Weinberg started actively soliciting bids for the company as part of its exploration of “strategic alternatives” after Talbots turned down a $212 million buyout proposal from Sycamore Partners in December. Sycamore, which holds a 9.9% stake in Talbots, offered $3 a share, a $1.44 premium over Talbot’s $1.56 share price at the time.

‘A Mix of Strategic and Private Equity Buyers’

Ironically, Sycamore is headed by Stefan Kaluzny, who was formerly managing director at Golden Gate Capital, another private equity now also apparently interested in buying Talbots. Golden Gate bought Talbots’ J. Jill brand in 2009 for $75 million, a bargain compared to the $517 million Talbots paid for it three years earlier. In addition, Golden Gate holds majority stakes in Express, Eddie Bauer, Zale Corp. and Pacsun.

TPG, which along with Warburg Pincus bought Neiman Marcus Group for $5.1 billion in 2005, partnered with Leonard Cohen & Partners last year in a $3 billion deal to take J. Crew private.

“A mix of strategic and private equity buyers have been approached. The data room will open in the next few days followed by a two-stage auction. They should have an outcome by the end of the second quarter,” a source told Reuters.

Talbots has declined comment on the market activity. The retailer said in December that Trudy Sullivan, its ceo, will retire as soon as a replacement is found.

“The right person could turn this company around,’’ said Jennifer Davis, an analyst at Lazard Capital Markets.


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