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Sycamore Partners ditches $525 million deal with Victoria’s Secret

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Private investment firm Sycamore Partners disclosed on Wednesday that it had cancelled its $525 million deal to acquire a majority stake in Victoria’s Secret due to the COVID-19 pandemic.

Sycamore said L Brands, Victoria’s Secret owner, had breached the terms of agreement after it closed its stores and furloughed staff.

L Brands had shut down 1,600 Victoria’s Secret and PINK shops globally, including more than a thousand stores in North America, without Sycamore’s permission.

The fashion retailer had also reduced compensation for senior staff and took other actions that could hurt the lingerie business, such as not paying rent or taking receipt of new merchandise, Sycamore said in a statement.

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“These actions were taken as a result of or in response to the COVID-19 pandemic is no defense to L Brands’ clear breaches of the transaction agreement,” Sycamore said in a complaint.

L Brands, in turn, vowed to challenge the decision through enforcing its contractual rights of “specific performance” for a judge to force completion of the deal.

“L Brands intends to continue working towards closing the transactions contemplated by the Transaction Agreement,” the retailing company said in a statement.

Sycamore first announced the acquisition on February 20, with the company keeping a 45% stake in Victoria’s Secret. L Brands agreed to hold the remaining 45 percent.

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