Simon Property Group (NYSE:SPG) is running to the rescue of yet another failed retailer. The mall operator, together with its frequent acquisition partner Authentic Brands Group, made a $305 million "stalking horse" bid for upscale men's clothier Brooks Brothers, which sought Chapter 11 bankruptcy protection earlier this month after 200 years in business because it was unable to survive the closures of its retail stores necessitated by the COVID-19 pandemic.
Through their joint SPARC Group entity, the mall operator and brand licensing company have set a floor for other bidders to beat. The duo previously teamed up to buy Aeropostale, Forever 21, and most recently Lucky Brand.
Halting the domino effect
According to Brooks Brothers, SPARC intends to purchase substantially all of the retailer's global operations as a going concern for $305 million, and is committing to keeping at least 125 of its stores open.
Brooks Brothers had a presence in 29 of Simon's 200 or so malls and retail properties at the end of 2019, giving Simon an obvious incentive to keep the men's suit retailer afloat. The more vacancies there are in malls, the fewer customers will visit them, causing sales at those stores that remain open to drop further and leading those malls to spiral downward.
The deadline for competing bids to be submitted is Aug. 5; a hearing to approve a deal to be held by Aug. 11.
WHP Global, which was formed last year with backing from Oaktree Capital to acquire global consumer brands -- and which already holds a $75 million debtor-in-possession loan made to Brooks Brothers -- is also interested in Brooks Brothers, as is Giglio Group, which wants to convert the clothier into an online-only brand.