Women’s apparel retailer Chico’s FAS rejects Sycamore’s $407m offer

US women’s apparel retailer Chico’s FAS has rejected private equity firm Sycamore Partners‘ offer to acquire it for $407.8 million or $3.50 per share in cash as it undervalued the company and is not in the best interest of its shareholders.

The Florida-based Chico’s FAS sells women’s apparel, accessories and related products through three brands – Chico’s, White House Black Market, Soma and TellTale.

As of 2 February 2019, Chico’s FAS operated 1,418 stores in the US and Canada and sold merchandise through 83 international franchise locations in Mexico.

Exterior of one of the US women’s apparel retailer Chico’s FAS store outlet. Photo courtesy of Chico’s FAS.

Sycamore Partners’ offer was on the heels of the rejection of prior buyout offer from it to purchase the US women’s apparel retailer for $4.30 per share in cash. That offer itself was rejected on grounds of being “substantially undervalued” and was not in the best interests of its shareholders, according to the board.

Commenting on the latest offer, David Walker –  Chair of the Chico’s FAS Board, said: “Chico’s FAS benefits from a strong operating and financial foundation, including a portfolio of differentiated brands, loyal customers and robust omnichannel capabilities. Sycamore’s interest underscores the upside opportunities that these competitive advantages create, but the prices Sycamore has proposed are inadequate and fail to recognize the full value of the Company and its future prospects.”

The US women’s apparel retailer has begun working on improving its performance, flexibility, and competence across the company, and increasing growth in all three of its brands.

While rejecting the offer from the private equity firm, Chico’s FAS said that the company is confident of generating value to its shareholders well in excess of what Sycamore had proposed.

The US women’s apparel retailer, which is on a lookout for permanent CEO and president, is planning to fully leverage its integrated omnichannel platform.

Chico’s FAS appointed former vice chair, president and CEO of Hudson’s Bay Company and a current member of its Board of Directors, Bonnie Brooks, as Interim CEO on 24 April 2019.