Photo: John Greim/LightRocket via Getty Images

Women's apparel retailer Chico's FAS yesterday rejected a $3.50 per share takeover offer from private equity firm Sycamore Partners, saying it undervalued the company. Nothing shocking, given that Chico's had previously rejected an offer from Sycamore that was 18.6% higher.

Buzz: There are still some big questions about how Sycamore will fare on this non-deal, given that it disclosed a 6.6% stake in Chico's at the same time it announced its $3.50 per share takeover offer. And if that offer, which was bound to be nixed, was designed to recoup some earlier losses.

  • Outsiders are, by definition, not insiders. But that doesn't mean that they can't trade on information that will move a stock.

Before continuing, it's important to note that Sycamore doesn't like to talk to reporters about ... well, anything. And it's maintained that same posture this time around, made even more complicated by the fact that its outside PR firm happens to represent Chico's on this particular situation. So what follows is based only on public filings:

  • Sycamore reported on a Form 13D that it had invested $33.4 million to purchase the 7.64 million shares it held as of May 10 (when the revised offer was disclosed). That works out to an average of $4.37 per share.
  • But in an attached exhibit of detailed trading data, Sycamore only shows that it purchased a total of 5.07 million shares for $21 million ($4.14 per share avg), inclusive of 647,000 shares it subsequently sold for $2.57 million ($3.97 avg).
    • In other words, there's an unexplained discrepancy. It seems to work against Sycamore's favor but, if there are undisclosed purchases, perhaps there were also undisclosed sales.
  • Sycamore appeared to buy at market prices, with many of its outlays between April 25 and May 9 coming below the $3.50 per share offer it was about to make. And all purchases in that period were below where the stock spiked after the lowball offer was announced.

This missing math makes it very difficult to figure out Sycamore's performance or intentions, particularly when married to the fact that we have no disclosures (yet) about what Sycamore might have sold subsequent to its press release.

  • Yes, this is small money for a buyout firm investing out of a $4.75 billion fund. And Sycamore could have made a takeover offer without having first purchased any public equity.

The bottom line: In light of yesterday's discussion of the LTSE, it goes to show how lax public equity transparency rules can help big investors cut their losses.

Go deeper: Big-name private equity firms are asking for bigger cuts of investment profits

Go deeper

Ben Geman, author of Generate
9 mins ago - Energy & Environment

The climate stakes of the Supreme Court fight

Illustration: Aïda Amer/Axios

Ruth Bader Ginsburg's death and the battle over her vacant Supreme Court seat have real implications for energy and climate policy.

Why it matters: If President Trump replaces her, the court will likely become more skeptical of regulations that claim expansive federal power to regulate carbon under existing law, and perhaps new climate statutes as well.

Dion Rabouin, author of Markets
21 mins ago - Economy & Business

The tech war between the U.S. and China escalates

Illustration: Aïda Amer/Axios

Economic tension between the U.S. and China continues to escalate but is shifting in focus — away from the tit-for-tat trade war and toward a more direct confrontation over the future of technology at the heart of the conflict between the world's two largest economies.

Why it matters: The battle between the U.S. and China was always about tech supremacy and the direct confrontation could result in an accelerated splintering of global supply chains and a significant reduction of international commerce.

Mike Allen, author of AM
Updated 35 mins ago - Politics & Policy

Trump's next moves in Supreme Court fight

Photo: Peter Zay/Anadolu Agency via Getty Images

President Trump told "Fox & Friends" on Monday that he plans to announce his pick to replace Justice Ruth Bader Ginsburg on the Supreme Court on Friday or Saturday.

The state of play: Axios has heard that Trump's choices to succeed Justice Ruth Bader Ginsburg are down to two women, both federal appeals court judges. The frontrunners are Amy Coney Barrett of Chicago, the early favorite, and Barbara Lagoa, who is viewed as easier to confirm. The Senate confirmed Lagoa 80-15 last year, so many Democrats have already voted for her.