US fashion retailer L Brands and private equity firm Sycamore Partners have agreed to mutually terminate the previously announced $525m sale of a 55% stake in Victoria’s Secret Lingerie to the latter.

The termination of the deal avoids a potential legal battle between the parties after Sycamore Partners filed a lawsuit in the Court of Chancery of the State of Delaware in late April against the US fashion retailer. The private equity firm accused L Brands of violating the terms of the deal signed in February 2020 by closing almost all of its nearly 1,600 Victoria’s Secret and PINK stores across the world, including more than 1,000 stores across North America without its permission.

L Brands and Sycamore Partners have now reached an agreement that neither of them has to pay the other any termination fee or other consideration while agreeing to settle all pending litigation and mutually releasing all claims.

The deal had valued Victoria’s Secret at $1.1 billion and would have resulted in its separation from L Brands into a privately-held company under the majority ownership of Sycamore Partners. Victoria’s Secret is made up of brands such as Victoria’s Secret Lingerie, Victoria’s Secret Beauty, and PINK.

L Brands said that it will continue with its efforts of making Bath & Body Works as a pure-play public company and is taking the required steps to prepare Victoria’s Secret to operate as a separate, independent company.

Sarah Nash – current director and future Chair of L Brands’ Board said: “Like all retailers, the company faces an extremely challenging business environment. Our Board believes that it is in the best interests of the company, our stockholders and our associates to focus our efforts entirely on navigating this environment to address those challenges and positioning our brands for success rather than engaging in costly and distracting litigation to force a partnership with Sycamore.

“We are implementing significant cost reduction actions and performance improvements at Victoria’s Secret while continuing to drive strong growth at Bath & Body Works. We will continue to make decisions and take actions with the best interests of all our stakeholders and the future of our company in mind.”

  Bath & Body Works, L Brands, Sarah Nash, Sycamore Partners, USA, Victoria’s Secret