Talbots Opts for “Poison Pill” To Ward Off Buyout Interest

After reported of buyout interest in women’s clothing retailer Talbots Inc., the company has opted for a “poison pill” stockholder rights plan, Reuters reported. The plan allows Talbots to issue shares at a discount to all other shareholders if a single investor buy a stake higher than 10%. Such a plan makes it more difficult for a buyer to launch a hostile takeover. Reports Monday stated that private equity shop Sycamore Partners was interested in buying Talbots.

(Reuters) – Women’s retailer Talbots Inc adopted a “poison pill” stockholder rights plan, a day after a media report said a New York-based private equity firm was considering buying the company.

The rights plan lets Talbots issue shares at a discount to all other shareholders if a single investor buy a stake higher than 10 percent. A rights plan makes it harder for a suitor to mount a hostile takeover due to the resultant dilution of the stock.

Talbots said its board adopted the rights plan to “promote fair and equal treatment of its stockholders in light of a recent rapid accumulation of a significant percentage of the company’s outstanding common stock.”

On Monday, the Wall Street Journal reported that private equity firm Sycamore Partners’ co-founder is considering the possibility of buying Talbots, citing sources.

Sycamore, started by retail industry veteran Stefan Kaluzny, had reported a 9.90 percent stake in the company.

Talbots shares closed at $4.07 on Monday on the New York Stock Exchange. (Reporting by Mihir Dalal in Bangalore; Editing by Viraj Nair)