Sycamore to Buy Belk Department Store in $3 Billion Deal

The Belk Inc. department-store chain, founded in 1888, has agreed to be acquired by Sycamore Partners for an estimated enterprise value at closing of approximately $3.0 billion.

Sycamore will pay $68 in cash for each share of Charlotte, North Carolina-based Belk. Under the terms of the transaction, Tim Belk will remain CEO of Belk and the company will continue to be headquartered in Charlotte. Founded by William Henry Belk, the company is in the third generation of Belk family leadership.

"We are delighted to have found a financial partner that sees what we see in Belk: a 127-year-old brand that remains relevant today with exceptional customer loyalty in small, medium and large cities throughout the South," said Tim Belk. "We plan to grow Belk by executing our current strategic initiatives and undertaking new growth initiatives together with Sycamore. This transaction is an across-the-board win for our stakeholders."

With close to 300 Belk stores located in 16 Southern states, Belk also has a growing digital presence. The chain recently underwent several years of major investment in upgrading IT infrastructure and core applications. This has enabled the company to compete in omnichannel retailing and stay competitive. The payoff for this is a 38.5% year-over-year rise in stock price and a 2.1% gain in revenue, however profit was down .4%.

The merger agreement was unanimously approved by Belk's board of directors. The merger is subject to certain customary conditions, including the receipt of regulatory and stockholder approval, and is expected to be completed in the fourth quarter of calendar 2015.

Certain Belk stockholders have agreed to vote shares owned or controlled by them representing, in the aggregate, a majority of the voting power of Belk's shares, in favor of the transaction.

Sycamore Partners is a private equity firm based in New York. Its investment portfolio currently includes Aeropostale, Coldwater Creek, Hot Topic, Nine West Holdings, Talbots and Torrid.

Goldman, Sachs & Co. is acting as financial advisor and King & Spalding LLP is acting as legal advisor to Belk. BofA Merrill Lynch is acting as financial advisor and Kirkland & Ellis LLP is acting as legal advisor to Sycamore Partners.
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