Simon-Authentic Brands venture snaps up Lucky Brand #SmallBiz - The Entrepreneurial Way with A.I.


Thursday, August 13, 2020

Simon-Authentic Brands venture snaps up Lucky Brand #SmallBiz

Dive Brief:

  • With a bankruptcy court's approval Wednesday of its purchase of Lucky Brand, Sparc Group, the 50-50 partnership of Simon Property Group and Authentic Brands Group, has successfully snapped up yet another bankrupt retailer, according to court documents.

  • Sparc added Lucky Brand to its stable for a price that includes $140.1 million in cash as well as other components. That came the same day Brooks Brothers asked the same court to approve its own sale to Sparc after the Simon-ABG venture sweetened its offer by $20 million to $325 million.

  • The Sparc overture accompanied Lucky's Chapter 11 filing last month in the U.S. Bankruptcy Court for the District of Delaware.

Dive Insight:

Simon and ABG have now worked together for four years and several deals to shore up ailing retailers by acquiring them, and have given that partnership a name.

Lucky is just the latest, with Brooks Brothers on its heels, the approval of that acquisition likely only a formality. However, while Simon CEO David Simon has long touted the companies' 2016 purchase of Aeropostale as a success, leading them to a similar investment in Forever 21 last year, it also remains to be seen how lucrative the ownership play proves to be as it expands.

For a while Simon, as an operator of mostly higher-quality shopping centers, was seen as protected from the steady decline of malls, which has only sped up thanks to the pandemic. But even those so-called "A" malls are under a level of pressure that is difficult to resist by buying up tenants, according to retail analyst Nick Egelanian.

"Despite limited success propping up (and in the case of Aeropostale, even profiting) from investing in retailers, this strategy has absolutely no chance of succeeding in anything but the short term," Egelanian, who is president of retail development firm Siteworks​, said in an email. 

via by Daphne Howland, Khareem Sudlow