Chico’s FAS is saying no to a lower version of a buyout offer made in May.
The Chico’s board of directors has unanimously rejected an unsolicited proposal received from Sycamore Partners on June 19, 2019 to acquire all of the outstanding shares of the company for $3.00 per share in cash. The $350 million offer follows rejected offers Sycamore previously made to acquire Chico’s for $3.50 a share and $4.30 a share.
In a press release, Chico's said its board determined that Sycamore's proposal “substantially undervalues” the company and is not in the best interests of its shareholders.
"Our focus is on serving the best interests of all Chico's FAS shareholders, and we are pleased with the strong support we have received from numerous Chico's FAS shareholders for the actions underway to improve the Company's performance,” said David Walker, chair of the Chico’s board. “Notably, shareholders have also expressed their belief that Sycamore's proposal significantly undervalues the company. We remain committed to enhancing value for all Chico's FAS shareholders. We are making progress on our new operating priorities and the search for a new CEO, and will remain focused on continuing to execute in these areas."
Chico’s has been challenged by sliding sales amid a decline in mall traffic and online competition. The company’s total same-store sales fell 4.9% last year and net sales slipped to $2.1 billion from $2.3 billion.
In January, Chico’s announced that it plans to close at least 250 stores across its three brands during the next three years. In April CEO and president Shelley Broader resigned. While it searches for a permanent replacement, Bonnie Brooks, former vice chair, president and CEO of Hudson’s Bay Company and a current member of the Chico’s board, is serving as interim chief.
Goldman Sachs & Co. LLC is serving as financial advisor to Chico's FAS, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel.