After incurring heavy losses for L Brands, Victoria’s Secret was all set to be acquired in a private deal. However, the current financial crisis most firms are facing has put the deal in jeopardy.
Sycamore Partners, the private equity firm that had agreed to buy a 55 per cent stake in the company in February for a total of US $ 1.1 billion, is now looking to back out.
Blaming the violation of their previous agreement, Sycamore Partners has filed a court complaint stating the steps taken by the brand like not paying April’s rent, cutting back on new inventory and closing the stores due to the pandemic, are against their agreement.
While L Brands’ decision to furlough employees and shut stores was in response to the pandemic, Sycamore has contested its validity and states that the lingerie retailer’s parent has breached the transaction agreement.
However, L Brands is prepared to fight them and defend their actions in court.
This deal had seemed like the turning over of a new leaf for the struggling lingerie retailer under the guidance of a new leadership. The announcement of the deal had also seen Les Wexner, its long time CEO, step down from his post.
The closure of stores, however inevitable, could be the last chink in the armour that leads to the brand’s complete downfall. They had also closed their e-commerce operations in March.
