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Chico’s Board Rejects $407.8 Million Offer From Sycamore Partners

Private equity firm Sycamore Partners, which offered $3.50 a share to acquire Chico’s FAS Inc. in a deal valued at $407.8 million, has been rebuffed again.

Sycamore made its offer last week, noting that it chose to go public after getting the cold shoulder once before. The initial offer was $4.30 a share, which the Chico’s board had said “substantially undervalued” the company.

On Thursday, the Chico’s board said the decision to reject the unsolicited offer was made “unanimously.” The Chico’s board essentially said both the current offer and the one from April 14, 2019 undervalued the company and was “not in the best interests of shareholders.”

David Walker, chairman of Chico’s board, said, “Chico’s FAS benefits from a strong operating and financial foundation, including a portfolio of differentiated brands, loyal customers and robust omnichannel capabilities. Sycamore’s interest underscores the upside opportunities that these competitive advantages create, but the prices Sycamore has proposed are inadequate and fail to recognize the full value of the company and its future prospects.”

Walker also said the board was “encouraged” by the direction that Bonnie Brooks, board member and interim chief executive officer, was taking for both merchandising and marketing, and said the search for a permanent CEO is “well underway.”

In Walker’s board letter to Sycamore, he noted that the board’s decision was made after conducting an analysis with the help of the company’s legal and financial advisors. Walker also said, “We believe your interest in Chico’s FAS underscores our growth and value creation prospects….We are confident that we can, on our own, deliver value to our shareholders well in excess of what Sycamore has proposed.”