Sycamore Partners, a New York-based private equity firm, is in talks to buy Chico's FAS, a company that operates more than 1,500 stores in the U.S. and Canada under the Chico's, Boston Proper, Soma and White House Black Market banners, according to reports. The deal to acquire the publicly traded Chico's would be in the range of $3 billion.
For Sycamore, the deal with the Chico's FAS represents its second recent attempt to engineer a leveraged buyout of a fashion retailer. According to The Wall Street Journal, talks to acquire Express were called off by the retailer after months of talks because Sycamore was unable to secure the financing necessary to make the deal happen.
At this point, Chico's FAS appears committed to the deal if the equity firm is able to secure financing. That may be easier said than done, however, as Reuters reports banks are "reluctant to meet Sycamore's demands for a lot of debt to increase returns on the deal."
While leveraged buyouts the size proposed by Sycamore for Chico's are not common, they are not totally unheard of either. A group of investors led by BC Partners agreed to acquire PetSmart for $8.2 billion in December.
Sycamore, which opened in 2011, according to The New York Times, focuses primarily on acquiring smaller chains. If the firm were to acquire Chico's FAS, it would add the company to a portfolio that includes Aéropostale, Anne Klein, Easy Spirit, Nine West, Stuart Weitzman and Talbots.
