Sparc Group, the entity formed by mall REIT Simon Property Group and brand management firm Authentic Brands Group, has struck a deal to acquire Eddie Bauer for an undisclosed amount, the companies said Friday.
The acquisition is expected to close by June 1, subject to standard closing conditions, including antitrust considerations in the U.S. and Canada, per an emailed press release.
PSEB Group, which has been running Eddie Bauer and PacSun, the same day announced a leadership shuffle. PacSun President Alfred Chang and PSEB Group Interim CEO Michael Relich will serve as co-chief executive officers, and PacSun Chief Brand Officer Brieane Olson will be promoted to president, per a company press release.
This deal further's Simon Property Group's ongoing effort to salvage its retail tenants in a tough era for mall-based retail.
Along with rival REIT Brookfield Property Partners, Simon has been lobbying Congress for changes to tax REIT law that would allow it to own more tenants. Several observers say that the mall operators have resorted to acquiring their own tenants in order to preserve those leases and prop up a key REIT revenue metric known as funds from operations. Current law limits such ownership. For Brookfield, changes to REIT law, which critics say could be detrimental to certain investors, may not be necessary once it goes private later this year, likely in the third quarter.
Simon, ABG and in a few cases Brookfield have partnered before in acquiring retailers, starting in 2016 when they bought teen retailer Aeropostale out of bankruptcy. Last year, the group acquired fast-fashion retailer Forever 21, also in bankruptcy, although Brookfield last week said it has sold its interest. An ABG spokesperson said Friday that ABG and Simon are the remaining owners.
Under Sparc, Simon and ABG last year gobbled up a series of other retailers out of bankruptcy as well, including Brooks Brothers and Lucky Brand. Simon and Brookfield also partnered to acquire J.C. Penney out of Chapter 11 in December.
Eddie Bauer's move to Sparc will undo an operating setup established in 2018 by private equity firm Golden Gate Capital in search of efficiencies for Eddie Bauer and teen surfwear retailer PacSun, two of its portfolio companies. Sparc plans to expand the brand via international growth, first in China and Korea and later in Latin America, Europe and elsewhere in the Asia Pacific region, according to ABG's press release.
The brand will also branch out "into new outdoor categories and distribution," at a time when outdoor gear is selling especially well as the pandemic spurred many toward outdoor activities, per the release. Kohl's recently turned to Eddie Bauer to expand its offer in the space.
The brand, established more than a century ago in the Pacific Northwest, "will remain headquartered in the Seattle area under the leadership of current President Damien Huang," the release said.