Sycamore Partners Seeks Greater Stake in Express Inc.

In Reports, What's New, Industry News by Jeff Prine

express2Columbus, OH—Express, Inc. confirmed Thursday that it has received a letter from Sycamore Partners, which owns approximately 9.9% of Express’ outstanding shares, indicating that Sycamore Partners is interested in acquiring maybe all of Express.

As a result, Express said it has established a Special Committee of the Board to determine a course of action it believes is in the best interest of all stockholders. In addition, Perella Weinberg Partners LP and Sullivan & Cromwell LLP have been engaged to serve as advisors to Express and the Special Committee.

In its letter to Express’ board, Sycamore said it would like to perform due diligence to determine a price for the retailer. The private investment firm said it would submit a bid within 30 days of getting access to Express’s books. Shares of Express, which had a $1.14 billion valuation at the close of trading on Thursday, surged as much as 33% after hours.

Shareholder Rights Plan Adopted

Sycamore, which was started in 2011 by two executives from buyout firm Golden Gate Capital Corp., has been looking to invest in a greater array of retailers. It previously acquired a stake in Aeropostale Inc. as well as an extended a $150 million loan to the teen retailer. Sycamore also purchased Hot Topic Inc. for about $533.5 million last year and was in talks to buy Billabong International Ltd. before discussions broke off. Earlier in the week, Sycamore announced it plans to revive the Coldwater Creek business and it paid $3.5 billion in capital to buy Talbots in 2012.

“Given the strategic and operational challenges faced by specialty retailers generally and the company in particular, a fully financed, binding, all-cash offer to acquire the company would be a valuable alternative for the company’s board of directors and stockholders consider,” said Stefan Kaluzny, managing partner in Sycamore.

Meanwhile, Express has adopted a Stockholder Rights Plan (sometimes call a poison pill), which is “intended to ensure all stockholders realize the long-term value of their investment in the company and protect them from unfair or coercive takeover attempts.” The Rights Plan is intended to provide the Board with sufficient time to consider any and all alternatives to an offer and does not prevent the Board from considering or accepting an offer, if the Board believes such action is fair, advisable and in the best interests of its stockholders.

Under the shareholder rights plan, any person or group who acquires 10% or more of the voting power of the company’s outstanding common stock without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the voting power of such person or group. The Rights Plan, which is similar to the rights plans of many other public companies, will continue in effect until June 12, 2015.

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