By Michelle Graff
Victoria’s Secret’s sale to private equity firm Sycamore Partners is off, parent company L Brands announced Monday. The deal was supposed to close in the second quarter. (Image courtesy of Wikimedia Commons/WestportWiki)
New York—The deal to sell Victoria’s Secret to a private equity firm has fallen through amid what owner L Brands described as “an extremely challenging business environment.”

L Brands Inc. and Sycamore Partners reached a “mutual agreement” to scrap the $525 million deal, L Brands said in a statement released Monday.

L Brands said it will move forward to with plans to establish Bath & Body Works, its moneymaker, as a pure-play public company while it is “taking the necessary steps” to prepare Victoria’s Secret—which includes Victoria’s Secret Lingerie, Victoria’s Secret Beauty and the teen-focused Pink businesses—to operate as a separate, standalone company.

In addition, all previously announced changes to its board of directors and leadership, including Les Wexner’s resignation, are still happening and will take effect at the annual, now virtual-only stockholders’ meeting on May 14.
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L Brands and Sycamore announced the deal in February, and it was scheduled to close in the second quarter.

But Sycamore started to waver as the coronavirus pandemic swept the globe, forcing the closure of nonessential retail stores like Victoria’s Secret.

The private equity firm first tried to renegotiate the deal and then filed suit against L Brands in April because it closed stores during COVID-19.

It claimed the closures violated the terms of the agreement, which included a clause dictating that L Brands must conduct business as usual.

L Brands countersued, calling Sycamore’s attempt “invalid.”

In the statement announcing the deal’s termination, incoming L Brands Chairwoman Sarah Nash said the board believes it is best course of action for the company, particularly given the current state of retail.

“Like all retailers, the company faces an extremely challenging business environment,” she said.

“Our board believes that it is in the best interests of the company, our stockholders and our associates to focus our efforts entirely on navigating this environment to address those challenges and positioning our brands for success, rather than engaging in costly and distracting litigation to force a partnership with Sycamore.”

As part of the termination agreement, both companies have agreed to settle all pending litigation and mutually release all claims.

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