May 8, 2012
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New Sycamore bid disappoints Talbots investors

May 8, 2012

Sycamore Partners marginally raised its bid for Talbots Inc to $214.6 million, disappointing investors looking for a more substantial offer that could ensure the sale of the struggling women's apparel retailer.

Talbots said Sycamore had offered to pay $3.05 per share - slightly more than the $3.00 per share, or $212 million, that the private equity firm first offered in December.

The retailer's shares fell 5 percent to $2.63 on the New York Stock Exchange on Monday.

"The worry to some extent is that the board could potentially reject this offer," said Rahul Sharma, managing director of investment management firm Neev Capital.

Sharma said while the new bid is not compelling, Talbots is also not likely to attract rival offers.

"The bargaining power of the company is not very high. The revised offer basically reflects that as well."

Cash-strapped Talbots, once a popular destination for its classic fashion, has been consistently lagging peers Ann Inc and Chico's FAS Inc and its sales have fallen for five straight years.

The company is also looking for a successor to outgoing Chief Executive Trudy Sullivan who unsuccessfully tried to reignite growth at the chain with new store formats and cost cuts.

Those efforts to reach out to younger shoppers met with failure and ended up alienating its core shoppers - women over the age of 35.

Talbots put itself up for sale and opened its books to Sycamore in January, shopping for a higher bid after rejecting the firm's initial offer.

"The board continues to evaluate strategic alternatives, including Sycamore Partners' proposal," Talbots said in a statement.

The company also said it entered an exclusivity agreement with Sycamore, which will end on May 15.

Sycamore declined to comment when contacted by Reuters. (Reporting by Ranjita Ganesan; Editing by Roshni Menon and Joyjeet Das)

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