A deal to sell Victoria’s Secret has been scrapped after its private equity buyer sued to get out of the deal on a coronavirus-related claim.
L Brands — the retail conglomerate owned by billionaire Les Wexner — said Monday it has scrapped its deal to sell a controlling stake in the struggling lingerie chain to Sycamore Partners, a New York-based buyout firm, in a deal that had valued the retailer at $1 billion.
Less than two weeks ago, Sycamore had filed a lawsuit to end the deal, claiming that L Brands had violated the terms of their agreement by closing Victoria’s Secret stores and failing to pay their rent during the pandemic.
The companies agreed to settle the litigation and neither of them will pay a termination fee, Sycamore said in a statement.
Shares of L Brands — which had tanked when the deal was originally announced in February, as Wall Street found the $1 billion valuation shockingly low — slumped again late Monday, falling more than 14 percent in after-market trades.
Columbus, Ohio -based L Brands named longtime Chief Financial Officer Stuart Burgdoerfer as interim chief executive of Victoria’s Secret effective immediately.
Wexner stepped down as CEO of L Brands, which also owns Bath & Body Works, in February.
L Brands said in a statement that it will “take the necessary steps to prepare Victoria’s Secret [along with its teen-focued Pink brand] to operate as a separate, standalone company.”