Tuesday, May 15, 2007

Another Golden Gate Acquisition

Limited Brands Inc., the owner of Victoria's Secret, agreed to sell a majority of its Express unit and put its Limited Stores up for sale after first-quarter 2007 profit fell to half the company's previous forecast.

The buyer? Golden Gate Capital, which will buy 67 percent of Express for $548 million.

Golden Gate Capital has become a major player in the direct commerce field. Last month it acquired Blair Corp. for $173.6 million in cash through Appleseed’s Topco, a portfolio company of Golden Gate Capital and another major direct commerce organization. Already in the Golden Gate Capital Catalog Holdings family are direct merchants Norm Thompson, Solutions, Sahalie, Carabella Collection, A.B. Lambdin, Wintersilks, The Tog Shop, Haband, Newport News, Spiegel, and Herbalife, all acquired within the last three years.

On the technology side, Golden Gate owns Escalate Retail (Ecometry/Blue Martini/GERS), Infor (B2B distribution), and Aspect (ACD solutions), among many others. Golden Gate also owns companies in semiconductors, electronics, financial services, and media.

Headquartered in San Franciso, the private equity firm has over $2.6 billion in capital under management. Many of its principles were formerly associated with Bain Capital LLC in Boston, the private equity firm founded in 1984 by Mitt Romney with several partners, including El Salvadoran billionaire Ricardo Poma. One of Bain's early acquisitions was Brookstone, so direct commerce investments are in the Bain/Golden Gate DNA, as it were. Bain's biggest coup was the start-up of Staples in 1986.

The acquired companies, which are left essentially intact (or, as in the case of Escalate Retail, strategically consolidated), stand to benefit from Golden Gate's experience in specialty retail and direct commerce for men's and women's clothing, plus the strong financial resources available to the private equity company. So it's a "good news" story, although change is always challenging, even when it's "for the better."

No comments:

Web Analytics