Sycamore Partners buys Belk for 3 billion dollars

US largest family-owned department store, Belk, Inc., has been acquired by New York-based private equity firm Sycamore Partners in a deal said to be circa 3 billion dollars.

Monday, Sycamore Partners announced it will get 100 percent of Belk in a deal that will pay to the department store chain’s shareholders 68 dollars per share.

The deal has been unanimously approved by Belk’s board, but remains subject to shareholder and regulatory approvals, reports Bloomberg. The Belk acquisition would be closed in the fourth quarter of this year.

Belk’s shareholders will receive 68 dollars per share

Founded in 1888 by William Henry Belk, the company is in the third generation of Belk family leadership and stands as the nation’s largest family owned and operated department store company with close to 300 Belk stores located in 16 Southern states and a growing digital presence.

Under the terms of the deal, Tim Belk will stay chief executive officer of the department-store chain and it will keep its headquarters in Charlotte, North Carolina.

Additionally, in a filing with the SEC, Belk reports they expect the sale of the company will lead to no store closings or layoffs. It is worth of recalling that Belk has posted 21 consecutive quarterly sales declines.

On a related note, activist investor Starboard Value, which also owns a stake in Macy’s, has said the retailer’s stock would be worth more if it better capitalised on its real estate. “We plan to grow Belk by executing our current strategic initiatives and undertaking new growth initiatives together with Sycamore”, they said.

Sycamore, which also manages Aeropostale, Coldwater Creek, Hot Topic, Talbots, and Torrid, the acquisition represents an ambitious push into a different area of retail.

As highlighted by market sources, Belk has been growing, “slowly yet steady”, over the past five years. Revenue rose 1.8 percent to 4.11 billion dollars in the year ended on Jan. 31.

“Belk is exactly the kind of investment we look for: an outstanding brand with a proven success formula and the potential for further growth,” Stefan Kaluzny, managing director of Sycamore, said in a statement.

this regard, Tim Belk, part of the company’s third generation of family leadership, said in the statement that “We are delighted to have found a financial partner that sees what we see in Belk,”. “We plan to grow Belk by executing our current strategic initiatives and undertaking new growth initiatives together with Sycamore.”

Goldman Sachs & Co has acted as Belk’s financial adviser, while Bank of America Merrill Lynch was Sycamore’s financial adviser.