Levi's deal highlights distressed M&A trend (Corporate Dealmaker)

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Levi's deal highlights distressed M&A trend

Posted on May 28, 2009 at 10:15 AM
Filed under: Divesting and Restructuring | Trends
Tagged: Anchor Blue Retail Group , Levi Strauss & Co.

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Levi Strauss & Co.'s deal to acquire the operating rights to 73 Levi's and Dockers outlets highlights a strategy we may see more of: corporate buyers as stalking-horse bidders in bankruptcy auctions. The outlet stores are operated by a subsidiary of Anchor Blue Retail Group Inc., which on Wednesday filed a voluntary petition under Chapter 11 to facilitate a sale of the assets and pursue restructuring. (The Deal Pipeline subscribers can read the details here.)

Corporates dipping into the distressed asset pool is a trend we predicted in the recent feature Distressed deals: Here come the strategics. It's also one Sullivan & Cromwell LLP M&A partner Frank Aquila has written about for The Deal magazine and discussed in this Inside The Deal video interview.

According to Aquila, buyers new to bankruptcy deals should be aware of the risks, including the likelihood that an agreed-upon price may rise, perhaps significantly, as other bidders enter the auction and stakeholders begin angling for their best outcome. - Suzanne Stevens

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