Sycamore Partners, the private equity firm is reportedly in preliminary talks to buy J.C. Penney Co. Inc. out of bankruptcy if the negotiation of the department store chain with its creditors fails to come through.
J.C. Penney has about 85,000 employees, and the company filed for bankruptcy protection last month after the ongoing global crisis made it temporarily close over 800 stores all over America. This compounded the financial troubles that had already started for the company due to years of declining sales.
Sycamore is still considering whether to downright acquire J.C. Penney or make an investment in the retailer. Till now, there is no guarantee that the talks between J.C. Penney and Sycamore will lead to a deal because that depends on the approval of a bankruptcy judge.It is important to mention that J.C. Penney is also considering whether to hand over the controls to the lenders in return for reducing its debt of almost $5 billion.
J.C. Penney has also been in touch with some of the landlords of the company, like Simon Property Group and Brookfield Asset Management Inc., about the possible transactions. A scenario might come up where Sycamore, Simon, and Brookfield come together to place a bid on J.C. Penney. In fact, even Wells Fargo & Co was involved in these discussions, according to sources.
The shares of J.C. Penney by 47% after the talks of acquiring it came up on the radar. It ended the day up at 55% and closed at 32 cents.
As the discussions are still very hush-hush, the sources requested to be kept anonymous. J.C. Penney and Sycamore have not made any comments on this. Brookfield, Simon, and Wells Fargo also refused to make any comments in this matter.