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L Brands is nearing a deal to sell its Victoria’s Secret brand. The buyer is Sycamore Partners, a private equity firm specializing in retail and consumer investments. The details of the deal have not been revealed.
In January, there appeared rumors about L Brands considering selling Victoria’s Secret brand and its CEO Lex Wexner stepping down. According to those familiar with the matter, the acquiring company is Sycamore Partners, a private equity firm specializing in retail and consumer investments. And this week, the closing of Victoria’s Secret selling deal may be finally announced.
Earlier, in November, L Brands was exploring a spin-off of Victoria’s Secret or “private investment in public equity.” At that time, Victoria’s Secret CEO Les Wexner was under pressure, which resulted from his relationship with the late sex criminal Jeffrey Epstein. Besides, Victoria’s Secret suffered a significant drop in stock price, and its shares fell more than 30% in 2019. Therefore, Wexner was subject to criticism for the poor performance of the company.
Activist fund Barington Capital Group sent a letter to L Brands criticizing the company’s performance. According to the fund, the board members’ ‘social and business relationships’ with Wexner raised ‘serious questions as to the true independence’ of its directors.
However, L Brands decided not to blame Wexner and started looking for options that could keep him in place. They included a spin-off of Victoria’s Secret brand and investment known as “private investment in public equity” with financial investors. Moreover, L Brands considered a vote of confidence in Wexner’s leadership.
For some time, there was no information on the results of the company’s efforts. Finally, in January, the Wall Street Journal reported that Sycamore Partners was mulling over the acquisition of Victoria’s Secret. But the deal could involve Wexner stepping down as CEO.
Both L Brands and Sycamore Partners declined to comment on the terms of Victoria’s Secret selling deal.
About Sycamore Partners
Sycamore Partners is a private equity firm with headquarters in New York. It specializes in retail and consumer investments and has approximately $10 billion in aggregate committed capital. The firm partners with management teams to improve the operating profitability and strategic value of their businesses. Besides, it provides flexible capital structured for each investment to enable companies to succeed.
Among the Sycamore Partners investments are Belk, Talbots, and Nine West Holdings. In 2017, Sycamore Partners purchased an office retail company Staples Inc. for $6.9. The acquisition became the largest leveraged buyout globally that year and brought Sycamore an annual gross return of 60%.
Buying Victoria’s Secret would mark Sycamore Partners’ betting to be a dominant player in the intimate apparel industry. In addition, Sycamore could also breathe a new life in the Victoria’s Secret brand after its setbacks.