Why Chico's FAS Shares Are Rocketing Today?

Chico's FAS Inc CHS shares are rocketing today following the announcement of its acquisition by Sycamore Partners for $1 billion.

As per the terms, CHS's shareholders will receive $7.60 per share in cash, representing a 65% premium to its closing price on September 27, 2023 (the last trading day before the transaction's announcement).

The deal includes a 30-day "go-shop" period expiring 11:59 PM ET on October 27, 2023, which allows CHS and its financial advisor to solicit and consider alternative acquisition proposals actively. 

The transaction, approved unanimously by CHS's Board of Directors, is expected to close by the end of first calendar quarter of 2024, subject to customary closing conditions and approvals. Post-deal closure, CHS will be de-listed from the NYSE. 

"Through this investment, we are gaining additional expertise, financial resources and strategic flexibility to fuel the growth of our company and three powerful brands: Chico's, White House Black Market and Soma. Sycamore Partners has an outstanding record in the retail industry in partnering with management teams to help businesses reach even greater levels of success," said Molly Langenstein, Chico's FAS Chief Executive Officer and President.

Last month, CHS reported Q2 revenue of $545.13 million, down 2.4% year-on-year, missing the Street view of $554.90 million and adjusted EPS of $0.28, beating the estimate of $0.27.

The company held $151 million in cash and equivalents as of quarter-end.

Price Action: CHS shares are up 62.26% at $7.48 premarket on the last check Thursday.