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Jun 8, 2009
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Talbots to sell J.Jill to Golden Gate for $75 mln

By
Reuters
Published
Jun 8, 2009

PHILADELPHIA, June 8 (Reuters) - Women's apparel retailer Talbots Inc (TLB.N) agreed on Monday 8 June to sell its J.Jill division to Golden Gate Capital for $75 million, just three years after buying it for $517 million.



Talbots had said in November it would try to sell J.Jill, which has been a weak spot for the company since its acquisition in 2006, and focus on its namesake Talbots brand.

The divestiture of the J.Jill brand is part of Talbots' efforts to focus exclusively on executing the turnaround of its core business and its newly launched upscale outlet, the company said.

"For the last several months, investors have been looking for the sale of J.Jill to be a way to get rid of a distraction and allow management to focus on the core Talbot's business," said UBS analyst Roxanne Meyer. "J.Jill has already been reclassified as a discontinued operation, but now the biggest source of cash drain is gone."

Talbots shares were down 4 cents, or 0.8 percent, at $4.97 in late morning trading on the New York Stock Exchange.

"This is a significant strategic step forward for Talbots as it enables us to focus our time, resources and attention exclusively on rejuvenating our core Talbots brand and return to profitable growth," said Chief Executive Trudy Sullivan.

Talbots, majority-owned by Japan's Aeon Co Ltd (8267.T), operates 586 Talbots brand stores in 47 states that feature women's clothing, shoes and accessories.

"We are encouraged by the product improvement at Talbot's, but given the weak traffic trends, we believe that TLB may have lost some of its more traditional customers and it will likely take some time to appeal to a new customer," Meyer said.

Talbots said J.Jill will continue to operate under the same brand name, will remain headquartered in Quincy, Massachusetts, and will continue to operate its distribution center in Tilton, New Hampshire.

Talbots will close 75 J.Jill stores within 60 days. The remaining 204 stores will be transferred to Golden Gate Capital.

Over the last five years, Golden Gate Capital has completed about 20 multichannel retail acquisitions totaling more than $3.5 billion in annual revenue. (Reporting by Jessica Hall; Editing by John Wallace and Brian Moss) (For more M&A news and our DealZone blog, go to here)

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