Talks to sell Victoria’s Secret to Sycamore Partners to spill into next week


Josephine Skriver attends the debut of Victoria’s Secret’s new fall collection at Natick Mall on August 17, 2019 in Natick, Massachusetts.

Taylor Hill | Getty Images

Talks to sell L Brands‘ Victoria’s Secret brand to private equity firm Sycamore Partners will spill into next week, as the complex deal structure creates headaches for its advisors, people familiar with the situation said.

L Brands had hoped to complete a deal by the end of this week, people familiar with the situation previously said. The company is now aiming to announce a deal as soon as Tuesday, people familiar with the matter said. They spoke on terms of anonymity because the deal talks are confidential.

Sycamore is simultaneously exploring an acquisition of L Brands’ Victoria’s Secret brand and, separately, a private investment in public equity, or PIPE, into L Brands, to address the parent company’s debt load, the people familiar said. The two are focused primarily on the sale of Victoria’s Secret, which they hope to get done with or without a PIPE.

The delay highlights the pressure L Brands is under as it grapples with a heavy debt load and the sluggish Victoria’s Secret brand. Those business challenges have been exacerbated amid scrutiny of L Brands Chairman and CEO Les Wexner and his ties to the late sex criminal Jeffrey Epstein.

Wexner is in talks to step down as CEO as part of the deal, one of the people familiar with the situation said.

Wexner’s dual role as chairman and CEO came under fire last year, when activist firm Barington Capital disclosed a stake in L Brands. Barington Capital criticized the L Brands board for its close social ties and pushed the company to split its Victoria’s Secret and the stronger-performing Bath & Body Works businesses. L Brands and Barington reached a truce last year that added the investment firm as a special advisor and two new directors to its board. The truce is set to expire this month.

L Brands had total debt of roughly $9 billion as of October 2019, according to FactSet. It has a market capitalization of $6.7 billion.

Sycamore has invested in public companies before. The investment firm in 2014 offered up a $150 million credit facility for then publicly traded company Aeropostale. The investment later put the two at odds, when Aeropostale accused Sycamore of helping to drive the company into bankruptcy. A bankruptcy judge ultimately took Sycamore’s side in the dispute.

A deal price for Victoria’s Secret could not be immediately determined, but analysts at MKM Partners earlier this week estimated a sale of the lingerie retailer could fetch $2 billion to $3.4 billion. The company generates roughly $7 billion in sales, a little more than half of L Brands’ business, according to FactSet.

L Brands and Sycamore declined to comment.

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