L Brands (BBWI 1.02%) filed a scathing response to Sycamore Partners' attempt to back out of its deal to buy Victoria's Secret, saying the private equity firm must live with the choices it made.
"Sycamore ... may regret that they did not negotiate the allocation of pandemic risk differently," L Brand’s lawyers said. "But having made that commercial choice, Sycamore must now live by it."
Image source: Victoria's Secret.
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Sycamore Partners agreed to buy a 55% stake in the Victoria's Secret lingerie brand for $525 million in a February deal that valued the business at $1.1 billion. Less than a month later, the coronavirus outbreak was declared a global pandemic and L Brands closed down the retailer's 1,100 stores, furloughed its 88,000 employees, and skipped paying its April rent in a bid to conserve cash.
Sycamore contends those actions violated the terms of the purchase agreement and it sued L Brands in a Delaware court in an effort to back out of the deal. L Brands responded the arguments were "nonsense."
In its filing, L Brands contends it was upfront with Sycamore Partners about its intentions during the crisis and "as recently as a week ago (Sycamore) intended to proceed with the transaction." It said the firm even admitted it was taking similar actions with its own retail properties in its portfolio.
L Brands wants the court to enforce the terms of the transaction that gives Sycamore a controlling stake in both Victoria's Secret and its sister Pink brand.
