Sun Capital and Golden Gate, Here’s Your Second Shot at Eddie Bauer

Here’s a little timeline on Eddie Bauer, which filed for Chapter 11 bankruptcy protection a few hours ago:

2003: Eddie Bauer’s parent company, Spiegel Group, files for bankruptcy.
2005: Eddie Bauer becomes a publicly traded company.
May 2006: Eddie Bauer puts itself up for sale.
October 2006: Eddie Bauer is reported to receive a “below market” offer from Sun Capital and Golden Gate Capital, meaning the bid from the two firms was below its share price.
November 2006: The company’s shares are driven down on news of the bid; Sun and Golden Gate agree on a deal at the same price (but no longer a “take-under”) for $614 million.
February 2007: Eddie Bauer’s shareholders reject the agreed-upon deal. Sun Capital refuses to sweeten its offer.
June 2009: Eddie Bauer loses money for nine quarters in a row.
June 2009: Eddie Bauer files for bankruptcy. Again.* The company files with an agreement to sell to CCMP Capital Advisors for $202 million.

Sun Capital and Golden Gate Capital have already done their diligence on Eddie Bauer. Could they plan a rival bid to CCMP?

Let’s set aside, for a moment, the fact that Sun Capital, has had quite a few fires of its own to put out lately, and look, instead, at the firm’s sheer amount of dry powder. The firm is currently investing from a $6 billion pool of capital that closed just over two years ago. The firm was active in 2007 and 2008, acquiring 25 companies in the latter, but half of them were add-ons and the firm typically pays very little for its “turnaround” plays.

And as for Golden Gate, the firm has been a deal-doing machine lately. Yesterday Golden Gate announced it will acquire SoftBrands Inc., a software company, for $80 million. A week prior, the firm purchased J.Jill, an apparel brand, from Talbots for $75 million. That deal could easily parallel a deal for Eddie Bauer. It was a certain victory for Golden Gate, since I’m guessing the firm looked at J.Jill when it was on the block three years prior. Talbots bought the company in 2006 for $517 million. By waiting three years, Golden Gate saved itself $440 million!

That same scenario could easily apply to bankrupt Eddie Bauer, if Golden Gate still sees potential in the brand. CCMP Capital has started the bidding off at $202 million, which is a sharp discount to Golden Gate and Sun Capital’s $614 million offer from 2006. Then again, back in 2006, Eddie Bauer could at least remember a time when it made money. After nine consecutive quarters of loss, a profitable future is harder to picture.

* Insert bad “Eddie Sour”puns here.