Return of the MAC: Investors, beware! sellers need to ‘fall off a cliff

New Delhi: In February 2020, Sycamore Partners, a private equity firm specializing in retail and consumer investments, signed an agreement with L Brands to acquire 55% of the iconic Victoria’s Secret (VS) label for $525 million. Two months later, in April, post COVID-19 lockdowns, Sycamore called off the deal, alleging that L Brands’ failed to conduct the VS business ‘in the ordinary course consistent with past practice’ and had materially breached the transaction agreement. Like other retailers affected by the COVID-19 pandemic, L Brands too had taken precautionary measures such as closing brick-and-mortar stores, laying off employees, reducing salaries, and stopping rent and orders of new merchandise. These steps were taken prior to closing of the transaction without Sycamore’s consent.

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