According to sources said to have direct information, J.C. Penney (OTC:JCPN.Q) may be currently working out a deal to be bought out by its own landlords, Brookfield Property Partners (NASDAQ:BPY) and Simon Property Group (NYSE:SPG). A third company, privately held Authentic Brands Group, LLC, is apparently in alliance with the retailer's landlords to work out an acquisition deal.
J.C. Penney recently declared Chapter 11 bankruptcy after store closures from the COVID-19 pandemic sent its already struggling operations into a tailspin. The bankruptcy saved J.C. Penney from immediate liquidation, but put it on a tight schedule to reforge itself into a financially functional company or face the prospect of being liquidated anyway.
Rumors have been flying about various potential purchasers of the company making offers, including Amazon. Last week, private equity firm Sycamore Partners appeared to be angling for an acquisition, after it broke off an earlier agreement to buy the Victoria's Secret brand from L Brands.
Brookfield Property and Simon Property, J.C. Penney's landlords, are said to be strong potential buyers because an acquisition would ensure their numerous retail properties remain occupied. Brookfield, Simon, and Authentic Brands have already cooperated on two similar deals in the past. The trio, along with several other partners, bought out apparel company Aeropostale for $243 million after it went bankrupt in 2016. They also bought "fast fashion" retailer FOREVER 21 for $81 million after it went bankrupt at the end of 2019.
Brookfield also created a $5 billion fund in April "to partner with companies and entrepreneurs that can draw on our capital and expertise to stabilize and grow their business," in the words of managing partner Ron Bloom, buying noncontrolling stakes in struggling retailers.