Sycamore not ready to pull trigger on Talbots deal

  • Posted: Saturday, May 26, 2012 12:01 a.m.
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NEW YORK — The women’s clothier Talbots Inc. said Friday that a deadline expired without a deal in its exclusive talks about being acquired by a private equity firm and that it will actively pursue other options.

Its shares plunged by more than a third in morning trading.

The retailer said that Sycamore Partners told the Massachusetts-based company that “it is not prepared to execute a transaction at this time.” Sycamore had previously indicated it would pay $3.05 per share for Talbots. The end of the talks sent Talbots’ stock down $1.05, or 41 percent, to close at $1.51 Friday.

The two companies had been in exclusive talks on a potential $211 million buyout, with Talbots extending the discussions a second time earlier this week. The latest deadline was Thursday.

Sycamore offered to buy Talbots for $3.05 per share earlier this month. That’s up from its prior offer of $3 per share for the Hingham, Mass. company, which it made in December.

Talbots said it is still open to pursuing a deal with Sycamore at the $3.05 per share purchase price. But it added that since its exclusive talks with Sycamore have ended, Talbots will actively explore other strategic options.

Talbots, which sells women’s clothing and accessories, has struggled for some time and posted annual losses for four of the five past years.

The company tried to reverse its downward spiral by cutting jobs, closing stores, lowering inventory, limiting marketing spending and trimming employee hours. But Talbots continues to look for other solutions to its woes. Its management has said it is considering all its strategic alternatives and is seeking a new leader for the company.

Talbots also reported on Friday that its fiscal first-quarter net income rose to $1.09 million, or 2 cents per share, from $739,000, or 1 cent per share, a year ago. Excluding restructuring charges and other items, earnings from continuing operations were 9 cents per share.

Revenue for the period ended April 28 fell 8 percent to $275.9 million from $301.3 million, partly hurt by store closings.

Analysts polled by FactSet expected a loss of 2 cents per share on revenue of $272.5 million.

Talbots had 516 stores in 46 states and Canada at the end of the first quarter. It has one store each in Charleston, Mount Pleasant and North Charleston.

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