The board of directors at Chico’s FAS Inc. on Thursday said it has “unanimously rejected” another offer, this time a lowered bid for a deal valued at $353.8 million, from Sycamore Partners to acquire the company.
The latest decision represents the third official rejection following the private equity firm’s three attempts, with each subsequent offer at a lower price. Sycamore’s first pitch was at $4.30 a share, and the second one in May was at $3.50 a share. The one Chico’s just rejected was an all-cash offer for $3.00 a share.
Chico’s said it has reviewed the Sycamore proposal with its independent financial and legal advisors. David Walker, board chair, said in a statement that shareholders have “expressed their belief that Sycamore’s proposal significantly undervalues the company.” He also reiterated that the company is making progress on its new operating priorities and in its search for a new chief executive officer.
Walker made public a letter sent to Stefan Kaluzny, a managing director at Sycamore. In the letter, Walker said, “As we detailed on our first quarter 2019 earnings call, we have recently made significant changes to the company’s leadership and reset priorities for growth and value creation. We have narrowed our focus and are now solely concentrated on three distinct areas that will positively impact our results, with sales-driving, customer-facing and supply-chain operational initiatives front and center. Implementation is underway…”
The board chairman also said the Sycamore offer is inadequate and “fails to recognize the full value of the company and its future prospects.” He reiterated that board members take their responsibilities to the company’s shareholders “seriously” and that “[w]e remain committed to enhancing value for all Chico’s FAS shareholder and are focusing our attention on the continued execution of our business plans.”
Chico’s on Monday said it changed its bylaws so that all shareholders can freely vote their shares. Sycamore, which last reported a 6.5 percent stake on June 21, had challenged a provision in a Florida statute that had an anti-takeover effect on anyone holding a stake of 20 percent or more of Chico’s shares.