The Sparc Group, owned by Authentic Brands Group LLC and Simon Property Group (SPG), has offered to buy bankrupt Brooks Brothers for $305 million.
According to the deal, Sparc Group would purchase substantially all of Brooks Brothers’ global business operations as a going concern. In addition, the group would also commit to acquire at least 125 Brooks Brothers retail stores. The offer is part of a so-called “stalking horse” agreement, which means the sale price marks the start of a bidding process for other parties to beat in a bankruptcy auction for America’s oldest apparel chain.
Brooks Brothers filed a motion in the US Bankruptcy Court for the District of Delaware to obtain court approval for the asset purchase agreement with Sparc. The clothing retailer, which has 200 stores in North America and 500 worldwide, filed for bankruptcy proceedings on July 8.
A court hearing for the approval of Sparc’s bid has been set for Aug. 3 with the deadline for the receipt of any other bidders set for Aug. 5. The final hearing to approve the final sale is scheduled for Aug. 11.
Earlier this month, Sparc entered into a stalking horse asset agreement to snap up bankrupt clothing retailer Lucky Brand Dungarees.
Simon Property shares rose about 1% to $60.92 in Monday’s pre-market trading. The stock has been hit hard losing 59% of its value so far this year.
Overall, analysts have a cautiously optimistic outlook on the stock. The Moderate Buy consensus shows 4 Buys versus 5 Holds and 1 Sell. Looking ahead, the $83 average analyst price target implies 37% upside potential over the coming year. (See SPG stock analysis on TipRanks)
Meanwhile, Goldman Sachs analyst Caitlin Burrows this month resumed coverage of the stock with a Buy rating and $94 price target (55% upside potential) on expectations that the company’s same-site operating income growth will improve in 2021 as properties are fully operational and return to a more normalized rate in 2022.
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