L Brands Merger Agreement

The Company also announced today that it has renewed its agreement with barington Capital Group, L.P. and Barington Companies Equity Partners, L.P. (together “Barington”) for a further twelve months. As part of the agreement, Barington will continue to serve as a special advisor to L Brands. So far, the private equity firm has generated impressive returns for its investors and huge paydays for its executives, although its core retail business is in decline. Sycamore had a portfolio of brands that were once ubiquitous in American malls: Nine West, Anne Klein, Hot Topic, Jones New York. In 2017, it bought office supplies seller Staples for $6.8 billion. Even when these brands faded, Sycamore sold assets, reduced staff and costs, and paid huge dividends. One of the managed funds achieved annualized returns of 43 per cent.

Their agreement was questionable at the end of April, when Sycamore announced to the apparel distributor that the agreement had ended due to L Brands` inability to maintain normal operations due to store closures in the midst of the COVID 19 pandemic. Sycamore was brought to court for his resignation. A few days later, L Brands filed a complaint to keep its agreement intact. www.barrons.com/articles/l-brands-sycamore-partners-abandon-victorias-secret-deal-51588627374 “We have long had a great deal of respect and admiration for L Brands and its success in creating a portfolio of top-notch lingerie and beauty brands,” said Stefan Kaluzny, Managing Director of Sycamore Partners. “With unparalleled global awareness and customer loyalty, we believe there is an important opportunity to revive growth and improve the profitability of Victoria`s Secret. We look forward to working with the management team to pursue these goals. Sycamore isn`t the only buyer trying to get out of deals, and some are much bigger than Victoria`s Secret. Gray Television has withdrawn its $8.5 billion offer on Tegna, Gannett`s former broadcast arm. BorgWarner, a car supplier, has threatened to cut its $3.3 billion merger deal with Delphi Technologies. SoftBank has withdrawn a $3 billion offer for the shares of office-sharing start-up WeWork; and Volkswagen announced it would delay its $2.9 billion offer for truck maker Navistar.

Whether one of them can legally invoke an “Act of God” clause depends on the terms of the contract. Instead, the complaint argues that L Brands did not conduct the Victoria`s Secret business in a manner consistent with previous practices, in violation of the agreement with Sycamore.