It’s been a busy week for New York investment banking firm Sycamore Partners Inc. Last Friday Sycamore Partners purchased the intellectual property and e-commerce assets of bankrupt women’s apparel retailer Coldwater Creek for an undisclosed fee. Coldwater Creek is No. 214 in the 2014 Internet Retailer Top 500.
Now Sycamore wants to acquire all of the outstanding shares of specialty apparel retailer Express Inc. (No. 96) and take over the company. “Given our familiarity with the company, we expect to complete our confirmatory due diligence, obtain definitive debt financing commitments for the acquisition and submit a fully financed binding acquisition proposal within 30 days after being provided access,” Sycamore wrote in a letter today to the Express board of directors, which Express disclosed in a regulatory finding with the U.S. Securities & Exchange Commission.
Currently Sycamore owns about 8.3 million shares of Express common stock, which Express says represents about 9.9% of 82.4 million shares of common stock. In its letter to the Express board of directors, Sycamore didn’t list a price per share or any other financial terms.
But Sycamore’s letter also makes it clear that it is willing to move aggressively to acquire Express, which sells apparel to younger shoppers in their 20s and 30s and generated web sales of $342 million in 2013. “Given Sycamore’s familiarity with the company, our access to significant immediately available funds—Sycamore has in excess of $3.5 billion of capital under management—and our proven track record in the capital markets, Sycamore is uniquely positioned to close an acquisition on an expedited timetable and is prepared to devote the necessary resources to do so.”
Express says it has appointed a special committee to study the letter and make recommendations to the board. The Express board also adopted a preventive takeover plan that prevents any shareholder from acquiring 10% or more of the company’s outstanding shares without board approval.
Sycamore specializes in acquiring apparel retailers and has been busy making acquisitions in the last two years. In December 2013 Sycamore acquired The Jones Group Inc. (No. 200), which owns and operates multiple apparel and accessories brands and e-commerce sites such as NineWest.com, in a deal valued at $2.2 billion, and in June 2013 acquired youth apparel chain retailer The Hot Topic Inc. (No. 252) in a deal valued at $600 million.
For the first quarter of fiscal 2014 ended May 3, Express reported:
E-commerce sales declined 2.4% to $69.0 million from $70.7 million;
- E-commerce sales declined 2.4% to $69.0 million from $70.7 million;
- Total sales decreased 9.6% to $460.7 million from $509.4 million in the first quarter of 2013;
- Comparable-store sales, including e-commerce, decreased 11%;
- Net income was $5.1 million, down by 84.3% from net income of $32.4 million in the first quarter of 2013.