Apparel News : Talbot sets in financial deal

BPW Acquisition Corp. a publicly held special purpose acquisition company, announced that it has entered into a definitive merger agreement pursuant to which it will be acquired by The Talbots, Inc a specialty retailer of women’s apparel. Upon closing the combined company will retain Talbots’ ticker symbol and will trade on the New York Stock Exchange.

Under the terms of the merger agreement, the proceeds of BPW’s cash-in-trust of approximately $350 million, in conjunction with additional financing obtained by Talbots, including a new $200 million revolving credit facility for which a commitment has been received from GE Capital, will be used to retire all of Talbots’ existing debt. In addition, Talbots will acquire all of the outstanding shares of Talbots common stock held by AEON (U.S.A.), Inc., which represents a more than 54% stake currently. BPW common shares will be exchanged for the equivalent of $11.25 per BPW share in Talbots’ common shares within a floating exchange ratio range of between 0.9000 – 1.3235 Talbots shares per BPW share, based on the trading prices of Talbots common stock prior to the BPW stockholders meeting. Pro forma for the merger, BPW’s shareholders will own between approximately 60-69% of Talbots’ common shares.

As part of the transaction, the Sponsors and certain directors of BPW will surrender an aggregate of 1,852,941 shares of BPW common stock, or approximately 30% of the shares held by the Sponsors and such directors, for no consideration.

The transaction also contemplates that, following receipt of BPW stockholder approval, Talbots will undertake an exchange offer for existing BPW warrants held by public warrantholders. The exchange offer will provide that 50% of the BPW warrants held by public warrantholders will be exchanged for the equivalent of $1.125 per BPW warrant in Talbots common shares through a floating exchange ratio of between .09000 - .13235 Talbots shares per BPW warrant, based on the trading prices of Talbots common stock prior to the BPW stockholders meeting, that the balance of BPW warrants held by public warrantholders would be exchanged for new Talbots warrants with new terms, including a term of 5 years and a strike price set at a premium of 30% to the closing valuation of Talbots’ common stock as determined under the merger agreement. The Sponsors and certain directors of BPW have agreed to exchange all of their warrants for Talbots common stock at the same floating exchange ratio of between .09000 - .13235 Talbots shares per BPW warrant.

Trudy Sullivan will remain President and Chief Executive Officer of Talbots, and will continue to lead the current management team, which is successfully implementing a turnaround of the company.

Gary S. Barancik, Chief Executive Officer of BPW said, “This is an outstanding opportunity for both BPW and Talbots. BPW is extremely pleased to be partnering with Talbots and its management team led by Trudy Sullivan. The merger of BPW and Talbots provides Talbots with the strategic capital necessary to strengthen its balance sheet, the working capital necessary to support future growth and the financial flexibility necessary to complete the operational improvements and strategic repositioning now well underway as demonstrated by the third quarter results. Furthermore, the merger provides BPW stockholders and warrant holders with immediate and significant value and the opportunity to participate in the future growth of Talbots, one of the country’s best known specialty retailers of women’s apparel.”

Trudy F. Sullivan, Talbots President and Chief Executive Officer said, “Over the past two years we reinvigorated the Talbots brand, re-engineered our supply chain, divested non-core businesses, and streamlined our cost structure to address both competitive and market pressures, putting in place a strong foundation for our future. We are now beginning to realize the benefits of this hard work, and we are delighted to have the support of BPW stockholders as we begin the next chapter of growth at Talbots. By joining with BPW, Talbots will have a stronger and more flexible balance sheet and capital structure and be well positioned for future value creation for all of our stakeholders. This is an exciting time for Talbots as this transaction will create a stronger company with significantly enhanced ability to execute on our strategic plans and opportunities.”

The proposed transaction is subject to limited customary closing conditions and regulatory approvals, receipt of necessary financing by Talbots, including as contemplated by a commitment letter from GE Capital, BPW stockholder approval and the completion of the BPW warrant exchange offer on the terms described in the merger agreement. Aeon, as majority stockholder of Talbots, has approved the issuance of Talbots stock in the transaction and no further vote of Talbots stockholders will be required to complete the transaction.

Wachtell, Lipton, Rosen & Katz and Akin Gump Strauss Hauer & Feld LLP acted as legal advisors to BPW in connection with the transaction.

Financo Securities, LLC provided a fairness opinion to BPW Acquisition Corp. in connection with the transaction.

SOURCE

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