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L Brands Plans to Spin Off Victoria’s Secret


L Brands has decided to spin off Victoria’s Secret rather than sell it, DealBook is first to report. The company said last year it was considering separating Victoria’s Secret from the rest of its business, and we previously reported that it was testing private equity’s interest. Ultimately, sources say, L Brands has decided to split itself into two independent, publicly listed companies: Victoria’s Secret and Bath & Body Works. The deal is expected to close in August.

Bids didn’t match what Victoria’s Secret expects to get in a spinoff. DealBook hears that L Brands received several bids north of $3 billion. It turned them down, because it expects to be valued somewhere between $5 billion and $7 billion in a spinoff to L Brands shareholders. Analysts at Citi and JPMorgan recently valued Victoria’s Secret as a stand-alone company at $5 billion.

The pandemic torpedoed a sale last year for much less. That agreement, announced in February 2020 with the investment firm Sycamore Partners, valued Victoria’s Secret at $1.1 billion. Apart from a pandemic that was about to upend the retail industry, Victoria’s Secret was dealing with a series of challenges: a brand that had fallen out of touch, accusations of misogyny and sexual harassment in the workplace and revelations about the ties between Les Wexner, the company’s founder and former chairman, and Jeffrey Epstein. (Wexner stepped down as C.E.O. last year and said in March that he and his wife are not running for re-election on the company’s board.)

  • As the pandemic shuttered stores and battered sales, Sycamore sued L Brands to get out of the deal, and L Brands countersued to enforce it, heralding a spate of similar battles between buyers and sellers. Eventually, in May 2020, the sides agreed to call off the deal.

A lot has changed since then. Six months ago, L Brands tapped Martin Waters, who headed its international division, to be C.E.O. of Victoria’s Secret, and he will continue to lead the company after the spinoff. The retailer has overhauled its brand, de-emphasizing the overtly sexy image and products that customers saw as exclusionary. It has become “less focused on a specific demographic target and more focused on being broadly inclusive of all women of all shapes and sizes and colors and ethnicities and genders and areas of interest,” Waters said on a recent earnings call. The company also closed more than 200 stores and focused on improving profitability, which rose sharply at the end of last year, surpassing its prepandemic results.

The pandemic has spawned some retail winners. Victoria’s Secret, Dick’s Sporting Goods, Michaels and others were able to accelerate digital transformations that may have otherwise taken years. Direct sales at Victoria’s Secret in North America rose to 44 percent of the total last year, from 25 percent the year before. It’s unclear whether pandemic shopping trends will stick, and “it would be reasonable to expect some reversion,” Stuart Burgdoerfer, the L Brands C.F.O., said at a March event. “But I also think that people have very much enjoyed some of the benefits that were forced on us or triggered through the pandemic.”

Markets wobble amid inflation fears. U.S. stock futures are down, as are European and Asian stock indexes, following data showing that U.S. consumers expect a bump in inflation and that factory-gate prices in China rose more than expected last month. April’s Consumer Price Index data is set to be released today, and is expected to show a sharp rise from a pandemic-depressed level last year.

China’s birthrate slows again. The country’s population is growing at its slowest pace in decades, posing grave social and economic risks to the world’s second-largest economy. While the U.S. also reported a drastic slowdown in population expansion, China “is growing old without first having grown rich,” The Times’s Sui-Lee Wee writes.

President Biden defends federal unemployment benefits. He rejected claims that $300-a-week supplemental payments are deterring unemployed Americans from seeking work, but he ordered the Labor Department to help reinstate work search requirements. Separately, Chipotle said it was raising wages, to an average of $15 an hour, to attract workers.

The Colonial Pipeline is expected to “substantially” reopen within days. The pipeline, which supplies nearly half of the East Coast’s fuel, is expected to restore most services by the weekend after a ransomware attack. U.S. authorities formally blamed a hacker group and pledged to “disrupt and prosecute” the perpetrators.

More children may soon be vaccinated. The F.D.A. yesterday approved the Pfizer-BioNTech vaccine for 12- to 15-year-olds in the U.S., potentially helping reopen schools and other parts of the economy more quickly. But while cases are declining worldwide, they are surging in countries that lack vaccines. And the W.H.O. labeled a virus variant spreading fast in India as “of concern.”

Amazon sold $18.5 billion worth of bonds yesterday, joining other corporate giants taking advantage of ultralow interest rates to raise money because … well, why not? The e-commerce titan sold some of its debt at a record-low interest rate for a corporate issuer — barely above what the U.S. government pays.

About $1 billion worth of two-year bonds has a yield just 0.1 percent above the equivalent in Treasuries. That’s a huge vote of confidence in Amazon, which has emerged as a huge winner during the pandemic. The company also set a record for yields on a 20-year bond, besting Alphabet. Over all, investors placed $50 billion worth of orders, underscoring enthusiasm for debt that yields next to nothing.

It raised another $1 billion in the form of a sustainability bond, which is meant to finance investments in environmentally minded projects like zero-carbon infrastructure and cleaner transportation. Amazon is the latest company to sell bonds aimed at E.S.G. investors, a market that reached $270 billion last year and could double this year.

  • To be sure, the bulk of the offering will finance typical corporate maneuvers like share buybacks, acquisitions and capital expenditures, according to the bond prospectus. It will add to the nearly $34 billion in cash that Amazon had on hand at the end of March — as will profits that are growing at extraordinary rates for a company of its size.

Macy’s has proposed building a commercial office tower on top of its flagship Herald Square store in New York City, part of a broader development plan the retailer says would improve the area. It plans to spend $235 million on redeveloping subway stations and creating a “car-free pedestrian-friendly urban space.” The proposal is a bold bet by the beleaguered retailer that shoppers and workers will flood back there after the pandemic.

Today, the Senate Finance Subcommittee on Taxation will hold a hearing on offshore tax evasion. “The tax gap is a massive problem, especially the part driven by ultrarich individuals and corporations stashing income overseas,” Senator Sheldon Whitehouse of Rhode Island, the subcommittee chair, told DealBook. That gap “could be as much as a trillion dollars,” he said. “That’s trillion with a ‘T.’” This money would help fund President Biden’s spending plans, which also run into the trillions.

It’s difficult to quantify just how much money goes uncollected each year, officials say. Corporate tax collections in the U.S. are “at historic lows and well below what other countries collect,” according to a recent Treasury report. U.S. multinational companies can be taxed at a 50 percent discount compared with their domestic peers, an incentive to shift profits abroad. “Bermuda, a country of merely 64,000 people, shows 10 percent of all reported U.S. multinational foreign profit,” the report explained.

“The Biden administration is serious about stopping tax cheats and so are we,” Whitehouse said. The hearing, which features I.R.S. and Treasury officials, will discuss legislation to end corporate tax breaks that incentivize profit shifting, a proposed $80 billion investment in I.R.S. enforcement, a new approach to international tax diplomacy and proposed changes to the tax code.


  • The investment firm TPG named Jon Winkelried as its sole C.E.O.; Jim Coulter, who previously shared the role, will become executive chairman and lead the firm’s E.S.G.-focused funds. (Bloomberg)

  • Vice Media is closing in on a deal to merge with a SPAC at a $3 billion valuation, which would leave existing investors in control. (WSJ)

  • Elliott Management has reportedly taken a stake in Duke Energy and plans to push for a change in strategy, after the utility rejected a takeover bid by NextEra Energy. (WSJ)

Politics and policy

  • In Wall-Streeters-seeking-political-office news: Glenn Youngkin, the former Carlyle Group co-C.E.O., won the Republican nomination for Virginia governor; and Alex Lasry, the son of the hedge fund mogul Marc Lasry, is running for the U.S. Senate in Wisconsin as a Democrat. (NYT, WaPo)

  • Big semiconductor makers and their customers have formed a new group to push for billions in federal funding to promote chip manufacturing in the U.S. (NYT)


  • Forty-four state attorneys general warned Facebook against plans to introduce a version of Instagram for children. (NYT)

  • The Pentagon reportedly may scrap its JEDI cloud-computing program, the subject of a lawsuit by Amazon and criticism from lawmakers. (WSJ)

  • Veteran traders are bringing old Wall Street tricks to crypto market-making. (Bloomberg)

Best of the rest

  • NBC said it won’t air next year’s Golden Globes ceremony, the biggest blow yet to the awards show as its organizers face criticism over a lack of diversity. (NYT)

  • An American court rejected an Australian company’s bid to scrap Ugg as a U.S. trademark. In Australia, it’s a catchall term for sheepskin boots with fleece linings. (NYT)

  • “How the Zoom era has ruined conversation” (WaPo)

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