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Authentic Brands Could Join J.C. Penney Buyout

By Rhian Hunt – Sep 14, 2020 at 11:18AM

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The deal would put Aeropostale, Forever 21, and other high-profile brands into Penney stores.

J.C. Penney (JCPN.Q) could have a third buyer riding to its rescue, participating in a buyout rather than allowing its bankruptcy to potentially continue to liquidation, according to a weekend report by Bloomberg. Privately held Authentic Brands Group is apparently joining Brookfield Property Partners (BPY) and Simon Property Group (SPG -2.17%) in their $1.75 billion purchase of Penney, likely bringing its array of famous brands to the clothing chain's shelves if the deal goes through.

According to details supplied by Business Insider, citing two anonymous sources close to the matter, Authentic is in "talks" with Brookfield and Simon, but may contribute its brand lineup rather than participating monetarily in the purchase of the retailer. While details remain unclear, a J.C. Penney spokeswoman indicated the acquisition itself involves "Simon and Brookfield only." Simon, Brookfield, and Authentic have worked together on previous buyout deals of financially failed companies or brands.

Concept art of businesspeople in silhouette negotiating against a backdrop of electronic nodes.

Image source: Getty Images.

Even if it doesn't contribute directly to the $1.75 billion purchase price, Authentic Brands Group would bring the value of its prominent brands to J.C. Penney's new lease on life. Aeropostale, Forever 21, Nine West, Nautica, Vince Camuto, and Juicy Couture are just some of the big-name labels Authentic has added to its holdings over the years.

Business Insider quoted WeWork CEO Sandeep Mathrani as saying Authentic's involvement in the deal will benefit J.C. Penney with "an entree into many of the brands that Authentic controls."

Despite its trio of powerful would-be rescuers, some analysts remain dubious J.C. Penney can be saved, noting it has racked up $5 billion in net losses and closed 20% of its stores over the past decade, well before COVID-19, and hasn't been profitable since 2010.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
JCPN.Q
Simon Property Group, Inc. Stock Quote
Simon Property Group, Inc.
SPG
$90.18 (-2.17%) $-2.00
Brookfield Property Partners Stock Quote
Brookfield Property Partners
BPY

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