Shares of Talbots Inc. (TLB) doubled in pre-market trade Thursday after the women's apparel retailer said it has agreed to be acquired by private equity firm Sycamore Partners for $2.75 per share in cash, much lower than the earlier offer.
The transaction is valued at about $369 million, including Talbots' net debt. The deal comes less than a week after Talbots said Sycamore was not prepared to acquire the company for $3.05 per share.
In December last year, Talbots had rejected an offer by Sycamore to buy the company for $3 per share in cash. That offer came weeks after Talbots spurned another proposal put forth by the private equity firm.
The current purchase price represents a 113 percent premium to Talbots' closing stock price on Wednesday. It also represents a 76 percent premium to the closing stock price on December 6, 2011, prior to the public disclosure of Sycamore's initial offer to buy Talbots.
Under the terms of the deal, an affiliate of Sycamore Partners will commence a tender offer to acquire all of the outstanding shares of Talbots' common stock. Under certain circumstances, the parties can opt to pursue a one-step merger. The transaction is currently expected to close in the third quarter of 2012.
Trudy Sullivan, President and Chief Executive Officer of Talbots, said, "Sycamore Partners is a strong investor with substantial resources and expertise, and we look forward to operating as a private company under their ownership."
While reporting its first-quarter financial results last week, Talbots said it will continue to explore strategic alternatives after Sycamore walked away from a deal to acquire the company for $3.05 per share.
Sycamore, which is Talbots' largest stakeholder, has said it was worried about Talbots' deteriorating situation, disappointing quarterly results and fall in stock prices.
The $3.05 per share offer was made early May, and Talbots entered into an exclusivity agreement with Sycamore in connection with the proposal. However, the private equity firm later said it was not prepared to buy Talbots for that price.
Hingham, Massachusetts-based Talbots has been struggling in the past few quarters as its sales were hurt by high promotional and markdown activity. During the recent first quarter, the retailer closed eight locations, including five full stores.
Talbots has closed 90 locations in total since the acceleration of its store rationalization plan in March 2011.
In Thursday's regular session, TLB is trading at $2.55, up $1.26 or 97.67 percent on a volume of 17.35 million.
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