Express Shares Surge as Sycamore Reports Stake -- Update

By Dow Jones Business News, 
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By Josh Beckerman

Private-equity firm Sycamore Partners reported a 9.9% stake in Express Inc. and said it is interested in conducting due diligence that could lead to a buyout of the retailer.

Express shares were up 20% at $16.30 in after-hours trading.

Sycamore said in a filing that it sent a letter to the company's board on Thursday about possibly submitting a binding, fully financed proposal.

Sycamore said it may seek discussions with Express's management and board and other stockholders.

A spokeswoman for Express wasn't immediately available for comment.

Given its familiarity with the company, Sycamore expects to complete confirmatory due diligence, obtain definitive debt financing commitments and submit an acquisition proposal within 30 days after Express provides access, the private- equity firm said in the letter.

On May 29, Express lowered its earnings outlook for the year and said "second quarter results will be impacted by the need to move through slow selling spring inventory" and a Memorial Day event that wasn't as successful as last year.

The retailer, which is geared toward young adults, broke off from L Brands Inc. in 2007 and went public in 2010. The company sells work and casual clothing for customers in their 20s and 30s and operates more than 600 stores. So far this year, Express has faced an intense promotional environment.

Express is the latest apparel company to have caught the attention of Stefan Kaluzny, who started Sycamore Partners in 2011 with partner Peter Morrow.

Both men had previously worked at Golden Gate Capital, a San Francisco buyout shop known for retailing deals. Messrs. Kaluzny and Morrow were at Golden Gate when the firm owned Express, and Mr. Kaluzny served on the board of Express from May 2010 to November 2011.

Sycamore owns a coterie of fashion brands, including Hot Topic, Talbots and the Jones Group. In May, it signed a definitive agreement for an investment in AĆ©ropostale Inc., the struggling teen retailer, and just this week the firm acquired the intellectual property of catalog retailer Coldwater Creek.

On Monday, Sycamore announced the closing of its second fund, bringing its assets under management to more than $ 3.5 billion.

Write to Josh Beckerman at josh.beckerman@wsj.com

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