Chico's FAS Surges 10% Following Private Equity Buyout Rumor

Shares of Chico's FAS, Inc. (NYSE: CHS) surged over 10 percent in the post-market Tuesday following a Dow Jones report that private-equity firm Sycamore Partners is in advanced talks to buy the company.

Assuming a premium on the current market capitalization of $2.65 billion, the deal could be valued at approximately $3 billion.

“Sizable leveraged buyouts--especially of public companies like Chico's--have been few and far between in recent years. Even though cheap financing has been plentiful, the rising stock market in many cases has put company valuations out of the reach of private-equity firms,” according to the report.

The complications of a leveraged buyout, and the fact that the terms of any deal have yet to be finalized, indicate that an acquisition may still face significant hurdles. For example, Sycamore Partners recently failed to acquire Express, Inc. (NYSE: EXPR) when the company could not arrange suitable financing.

Chico’s and Express are not the only retailers the company has sought to acquire. The firm bought out Jones Group in 2014 and agreed to sell Stuart Weitzman to Coach Inc. (NYSE: COH) in January.

According to the firm’s website, Sycamore Partners has $3.5 billion under management and investments in 11 companies.

Chico's FAS, Inc. traded at $19.10 in the after-hours session, up 10.72 percent.