HINGHAM, Mass. ― Private equity firm Sycamore Partners’ $3 a share bid for Talbots Inc is “opportunistic and a very low offer,” a top investor in the ailing retailer said.
Sycamore, which owns 9.9 percent of Talbots, offered to buy it for about $212 million on Tuesday, when the company was worth about $110.3 million.
“The company’s numbers right now are distorted by merchandising issues,” Mitch Williams, a fund manager at OppenheimerFunds told Reuters.
Oppenheimer is the biggest institutional stakeholder in Talbot with a 11.9 percent stake, followed by Sycamore, according to Thomson Reuters data.
Williams refused to say what he would consider a fair valuation, but said any offer had to take into account Talbot’s historical performance and not just the recent past.
When asked about Oppenheimer’s stand, a spokesman for Sycamore Partners said the firm had no comment beyond what it said in its recent filing.
Founded in post-war Massachusetts, Talbots built its reputation on its traditional pearls-and-classics fashions, but is widely seen as dull today.
Shares have dropped from the $30-levels they used to trade at a decade ago to around $1.56 just prior to Sycamore’s bid. They shot up to $2.80 on the New York Stock Exchange Thursday.
The retailer has lagged peers Ann Inc and Chico’s FAS, as it tried and failed to attract younger shoppers, while alienating its core older customers in the process.
On Monday, Talbots said it was looking for a new chief executive to replace Trudy Sullivan, four years after she took charge.
Sales have fallen steadily over the past three years, and some investors and analysts have long been expecting a sale.
“Talbots’ business trends have been among the weakest in a struggling women’s retail sector,” Nomura Securities International analyst Paul Lejuez wrote in a note titled “Talbots – Take The Money and Run.”
The analyst also said he did not expect the offer to be raised meaningfully, given the 92 percent premium.
Eric Kuby, chief investment officer at North Star Investment Management Corp, who exited the stock before Sycamore’s offer said: “On the basis of where the company is going and what the stock is doing, it is a reasonable offer.”
“But on the basis of what the stock could be worth if they got things turned around, it’s a very low offer.”