On May 5, 2020, The New York Times (NYT) reported under the heading “Here come the busted deals,” that L Brands, majority owner of Victoria’s Secret, who had a seemingly airtight case for selling a majority stake in Victoria’s Secret, had agreed to let the buyer, Sycamore Partners, walk.
L Brands agreed to let Sycamore walk away, even though it had a strong argument to enforce the agreement made in February 2020. Sycamore had argued that the coronavirus outbreak led to irreparable damage to Victoria’s Secret, but the merger agreement actually anticipated the concept of a pandemic and excluded pandemics as a reason for walking away from the deal. Yes, the merger agreement allowed for the voiding of the deal due to an “act of God,” but in the acquisition agreement, the lawyers carved out specific exceptions to those acts of God, including a pandemic. That meant that even if a pandemic struck, Sycamore would be legally obligated to complete the deal.