Victoria's Secret parent L Brands plummets 27% after Sycamore tries to back out of acquiring majority stake

• Shares of Victoria's Secret parent company L Brands plummeted 27% in Wednesday's trading session after private equity firm Sycamore Partners signaled that it is looking to abandon its previously announced acquisition of Victoria's Secret.
• L Brands announced in late February that it would sell a 55% stake in the troubled lingerie maker to Sycamore Partners, valuing the company at $1.1 billion. L Brands planned to refocus the company on its Bath and Body Works brand.
• Now, Sycamore is arguing that L Brands breached its deal terms by closing stores, furloughing employees, and not paying April rent in response to the coronavirus pandemic.
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Shares of Victoria's Secret parent company L Brands cratered 27% in Wednesday's trading session after Bloomberg reported that private equity firm Sycamore Partners was looking to abandon its planned acquisition of a majority stake in Victoria's Secret.

In February, the two firms announced that Sycamore would spend $525 million to acquire a 55% stake in the company, valuing the lingerie maker at $1.1 billion. L Brands planned to refocus the company on its Bath and Body Works brand.

Now, Sycamore is seeking to terminate the proposed deal on grounds that L Brands breached deal terms amid the coronavirus pandemic, according to court filings. Sycamore argued that when L Brand's closed all Victoria's Secret stores in mid-March, furloughed its employees, and didn't pay April rent, L Brands breached its promise "to conduct the Business in the ordinary course consistent with past practice."

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Sycamore also argued that these "voluntary actions" caused "severe damage" to the Victoria's Secret brand that cannot be repaired.

"That these actions were taken as a result of or in response to the Covid-19 pandemic is no defense," Sycamore added in the filing.

In late March, Women's Wear Daily reported that the deal was at risk due to the coronavirus.

Shares of L Brands were halted for nearly an hour Wednesday afternoon. Priced around $9.42, the stock is down 48% year-to-date.