L Brands has abandoned its Victoria’s Secret takeover deal with Sycamore Partners.
The agreement would have seen the private equity firm buy Victoria’s Secret’s lingerie and beauty divisions, as well as L Brands’ Pink fashion business, in a deal that was expected to fetch US$525m.
The New York-based investment company retaliated with a counter suit against L Brands claiming the Bath & Body Works owner had breached its takeover terms by closing nearly all of Victoria’s Secret’s and Pink’s 1,600 outlets due to the Covid-19 lockdown.
As a result of the breakdown, L Brands has implemented a major leadership reshuffle to ensure Victoria’s Secret’s survival as a standalone entity.
Leslie Waxner – L Brands’ former CEO – has been replaced by Bath & Body Works’ CEO Andrew Meslow, who will also join L Brands’ Board; she has also stepped down as Chairman of the Board and has been succeeded by Sarah Nash.
Meanwhile, Stuart Burgdoerfer, L Brands’ CFO, will take over as Interim CEO of Victoria’s Secret, while continuing to serve in his current position.
“Like all retailers, the company faces an extremely challenging business environment,” said Nash.
“Our Board believes that it is in the best interests of the company, our stakeholders and our associates to focus our efforts entirely on navigating this environment to address those challenges and positioning our brands for success rather than engaging in costly and distracting litigation to force a partnership with Sycamore.”
L Brands said it is taking proactive measures to manage costs and expenditures of Victoria’s Secret to ensure liquidity during the Covid-19 lockdown, and is taking steps to improve its performance once its stores reopen.
“We are implementing significant cost reduction actions and performance improvements at Victoria’s Secret while continuing to drive strong growth at Bath & Body Works,” continued Nash.
“We will continue to make decisions and take actions with the best interests of all our stakeholders and the future of our company in mind.”
In a statement to Cosmetics Business, Sycamore said it had ceased all litigation with L Brands and that neither party will be required to pay termination fees or other considerations as a result of the decision.