Ubiquitous mall owner Simon Property Group (NYSE: SPG) and privately-held Authentic Brands Group are set to purchase the popular men's clothing company Brooks Brothers, which recently filed for chapter 11 bankruptcy, for $325 million. Simon Property Group is the largest shopping mall operator in the United States and together with Authentic Brands Group make up Sparc Group.
At the time Brooks Brothers filed for bankruptcy, the company had 236 stores in the United States and 424 stores globally. That was before the pandemic hit. Now, Brooks Brothers is down to 125 store locations. Once Sparc Group's purchases goes through, they will be in a position to save the company's remaining 125 stores and work to restructure and recover the business.
A rival to Authentic Brands Group, WHP Global, was also preparing to place a bid on Brooks Brothers. However, Brooks Brothers has since agreed to sell to Sparc Group for $325 million, following court approval.
The pandemic has naturally caused a disruption in many areas of commerce, and Brooks Brothers was unfortunately not immune to those impacts. This may not be a complete surprise, though, considering that many work meetings that would call for suits now allow more casual dress over Zoom conferences (NASDAQ: ZM) and since many formal events involving large gatherings have either been cancelled or postponed.
When it comes to Sparc Group, they're not solely interested in Brooks Brothers during this time. The group has also bid on denim-company Lucky Brand, which has recently filed for bankruptcy.
Many other opportunities may be emerging as well, with declarations of bankruptcy in retail on the rise. Since May, J.C. Penney (NYSE: JCP), J. Crew, Neiman Marcus, and Ascena Retail Group (NASDAQ: ASNA), owner of Ann Taylor and the Loft, have all filed for bankruptcy.
Simon Property Group and Authentic Brands Group previously combined their efforts in 2016 to buy Aeropostale. Last year, the two joined mall owner Brookfield Property Partners to acquire Forever 21. Both companies that were bought also faced bankruptcy.
Furthermore, news of Brooks Brothers' bankruptcy and sale may be particularly noteworthy considering the historical significance of the company. Brooks Brothers was founded in 1818 and is the oldest clothing brand with continuous operations in the country, having clothed the majority of U.S. presidents, including President Abraham Lincoln on the night of his assassination.
The selling price of Brooks Brothers at $325 million is up from Sparc Group's original offer of $305 million.