News Column

Chico's mum about report it's considering change from public to private company

June 13, 2014

By Laura Layden, Naples Daily News, Fla.



June 13--FORT MYERS -- Fort Myers-based women's retailer Chico's FAS Inc. may be hanging a price tag on itself.

The Financial Times reported Monday the company may be in talks to sell itself to a private equity firm. Financial Times reported that Chico's had "discussed a deal with potential suitors that could lead to one of the largest take-private transactions so far this year."

The move would take Chico's from a public company to a private one.

The company has declined to comment on whether it's in talks to go private.

Attempts by the Daily News to reach a company representative by phone and email Thursday were unsuccessful. The Financial Times used unnamed sources for its information, with one of those sources cautioning that discussions are preliminary and that there's no certainty of a deal.

Chico's hasn't filed any papers with the Securities and Exchange Commission indicating a potential sale.

"I don't think there is any urgency whatsoever," said Andy Hill, president of Andrew Hill Investment Advisors in Naples, who has closely watched the company for years. "I don't know if management wants to do anything right now. The stock is so cheap."

His firm has a small investment in Chico's.

The company's stock price surged Tuesday and climbed again Wednesday, with the chatter about a potential sale. Trading volume also has been up over the past few days.

On Thursday, shares lost some of this week's earlier gains, closing down 11 cents at $16.73 on the New York Stock Exchange. Over the past year, they've traded as high as $19.84.

"The industry is out of favor so it's somewhat of a value opportunity, which is when private equity firms look to take advantage of the situation, when prices are cheap," Hill said.

Shares have taken a hit from several quarters of disappointing sales results, in a challenging retail environment.

In April, Leonard Green & Partners LP, a private equity group based in Los Angeles, revealed it had a 1.3 percent stake in Chico's after purchasing more than 2 million shares.

If the retailer is sold, the deal could be valued at more than $3 billion. Its market capitalization, or the total value of its issued shares, is $2.48 billion.

Chico's has four brands: Chico's, White House/Black Market, Soma Intimates and its newest, Boston Proper.

"Theoretically if they go private, they are not under the pressure to perform quarter to quarter, with the investment community constantly looking for immediate returns," Hill said. "As an investor, I want instantaneous returns. I want everything to work out perfectly. Unfortunately, that's not reality."

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(c)2014 Naples Daily News (Naples, Fla.)

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Source: Naples Daily News (FL)


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