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Retailer Express finds itself a takeover target

Private-equity firm Sycamore Partners has amassed a 9.9% stake in Express, adding it is interested in acquiring the fashion retailer that generates a little over $2 billion in annual sales.

The retail-focused firm disclosed it has acquired 8.3 million of the retailer’s shares, an investment value at about $112 million as of Thursday’s close. In a letter to the board, filed with the Securities and Exchange Commission, Sycamore said the purchases demonstrated “our interest in acquiring the company.” With the cooperation of the Express (EXPR) board, Sycamore requested an opportunity to perform due diligence to determine the retailer’s valuation. If that diligence were granted, Sycamore estimated it could submit an acquisition proposal within 30 days.

Express, in a separate statement, said its board would consider the plan but also announced it adopted a one-year shareholder-rights plan that will prevent investors from gaining sizable control of the retailer. The shareholder-rights plan has a 10% trigger. Also known as a poison pill, the plan is designed to dilute the value of the stock by flooding the market with additional shares, making it expensive for an investor to acquire a controlling stake.

Sycamore is aiming to acquire a specialty apparel and accessory retailer that opened its first store in 1980 as a division of L Brands (LB), which still owns and operates Victoria’s Secret and Bath & Body Works. Express completed its own initial public offering in 2010, and now operates around 630 stores in the U.S., Canada, and Puerto Rico. The company’s net sales tilt more toward women’s merchandise. Sales have been rising consistently in recent years and exceeded $2.2 billion for the latest year.

Earlier this month, Sycamore fully acquired women’s retailer Coldwater Creek’s brand and other intellectual property, after that company landed in bankruptcy earlier this year. Sycamore also fully acquired teen retailer Hot Topic for about $600 million last year, and holds a stake in Aeropostale (ARO), as well as several other retail investments. Sycamore also recently announced it raised $2.5 billion for its second fund, bringing total assets under management above $3.5 billion.

At the time, Sycamore managing director Stefan Kaluzny hinted acquisitions were on the horizon, saying the new fund would put the firm in position to “acquire and improve the very best consumer and retail brands.”