The real estate investment trust (REIT), which specializes in shopping malls, jointly with privately held Authentic Brands Group owns SPARC Group. This entity controls a set of clothing brands that includes Nautica and Aeropostale. SPARC has made a stalking horse bid for "substantially all" of Lucky Brand's assets following its bankruptcy declaration on July 3.
A stalking horse bid is one in which a potential buyer makes an initial offer for bankruptcy assets. This usually sets a low-end price; if there are subsequent bidders, they typically place higher offers. By positioning itself as a stalking horse, the bidder typically is rewarded with incentives such as expense reimbursements for the service of setting that pricing floor.
SPARC's offer is $140 million in cash, accompanied by a credit bid of $51.5 million and other consideration. Separately, a freshly created subsidiary of Authentic Brands has made a bid of $90 million for Lucky Brand's intellectual property.
So far, it seems no other entities have yet made bid. Simon has not released a statement on its participation in the Lucky Brand bid. Earlier this year it made a stalking horse bid for the bankrupt Forever 21 in a similar situation.
Simon and Lucky Brand have a history together. The REIT is a landlord for many of the retailer's stores; these are still a common sight in shopping malls throughout the United States. Lucky Brands is currently owned by Leonard Green & Partners, a private equity firm. Leonard Green also holds a minority stake in Authentic Brands Group.
Simon's stock inched up by less than 0.2% on Monday, lagging behind the gains of the major equity indexes on the day.