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L Brands, Sycamore agree to call off Victoria's Secret deal
[NEW YORK] L Brands Inc said on Monday it has agreed to call off the sale of its majority stake in Victoria's Secret lingerie business to buyout firm Sycamore, averting a bitter legal battle between the two companies over the US$525 million deal.
Shares of the Columbus, Ohio-based L Brands fell 11 per cent in extended trading. The company said instead it was preparing to operate Victoria's Secret as well as its personal care brand Bath & Body Works as separate, standalone units.
L Brands said it was in its best interests to focus on navigating an extremely challenging business environment rather than engaging in costly and distracting litigation to force a partnership with Sycamore.
Sycamore Partners, which had agreed to buy a 55 per cent stake in the Victoria's Secret business in February, said neither party would be required to pay a termination fee and that both sides have agreed to settle all pending litigation.
Sycamore filed a legal complaint in late April, alleging that L Brands breached the terms of the deal by closing nearly all of its about 1,600 Victoria's Secret and PINK stores globally, including more than a thousand stores in North America without Sycamore's permission.
L Brands had then said it planned to challenge the move.
The company said on Monday its board has appointed Chief Financial Officer Stuart Burgdoerfer as the interim chief executive officer of Victoria's Secret.
The leadership changes announced earlier this year, including that of L brands CEO Leslie Wexner stepping down, would be effective later this month, it said.