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Express ends buyout talks with Sycamore Partners

By Angela Gonzalez-Rodriguez

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Business

In a filling to the SEC, Express Inc. (EXPR) announced on Tuesday that discussions regarding Sycamore Partners' expressed interest in acquiring Express have been terminated.

“In connection with such termination, Sycamore Partners has agreed to be bound until June 15, 2015, by certain restrictions relating to, among other things, the disclosure of certain information and its ability to contact or enter into an arrangement with third parties for the purpose of acquiring Express,” read the filling.

In response to such announce, the stock sharply fell Tuesday to finish with a loss of 1.85 dollars at 12.59 dollars yet with volume at a 7-month high. It is noteworthy that Express sank to its lowest level since the beginning of June.

“Express shares rose months ago on news of Sycamore’s interest, so it’s hardly surprising that Express shares fell on the news that Sycamore wouldn’t be buying. The apparel retailer focused on young adults runs 600 stores in the U.S., and is struggling as many other teen retailers are due to declining mall traffic and changing taste,” said analysts at Retail Dive commenting the news.

Buyout conversations fail due to lack of “acceptable terms” of financing

In June, the venture capital firm revealed a 9.9 percent stake in the retailer and said it was interested in buying.

Sycamore Partners announced that despite having worked together in good faith towards a transaction over the past several months, discussions regarding Sycamore Partners' expressed interest in acquiring Express have been terminated due to the unavailability of financing on commercially acceptable terms.

However, Sycamore agreed to some restrictions, which included not contacting or entering into arrangements with third parties for buying Express, a joint statement said.

Soon after the announcement was made public, TheStreet Ratings team rated Express Inc. as a ‘Hold ‘ saying: "The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."