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Sycamore makes shock Talbots buy days after deal breakdown

31 May 2012

Sycamore Partners has made a surprise purchase of women’s clothing chain Talbots just days after apparently walking away from the deal.

Talbots shares doubled in value ahead of this morning’s New York Stock Exchange opening following the $369m deal, which was made up of $193m in cash and $176m debt.

Shares in the store chain had fallen to $1.29 at yesterday’s close compared to a 52 week high of $10.40, but immediately jumped to $2.59 when the US markets opened today.

Sycamore’s purchase price of $2.75 a share represents a 113 per cent premium compared to yesterday’s close and a 76 per cent premium to the close on December 6 last year, when the firm first announced its interest in the company.

The New York buyout house tabled a $3 a share bid at that point which was turned down by Talbots, who were holding out for an offer of $3.05 per share.

That decision seemed to have scuppered Sycamore’s chance to buy the company after talks broke down last week, but Talbots apparently had a change of heart as its share price continued to plummet.

Last year Talbots announced plans to cut staff by nine per cent and scrap national advertising campaigns in a bid to cut costs and remarket itself with new store layouts, in an attempt to appeal to a younger market as well as its current customer base.

The company operated 516 retail outlets in the US and Canada at the end of the first quarter of 2012, down from 551 in the third quarter of last year.

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