Hedge fund suit threatens to delay Talbots deal

Hingham, Mass. A hedge fund manager has sued to potentially delay The Talbots Co.’s pending private-equity backed merger, accusing the clothing retailer and its deal partner, BPW Acquisition Corp., of pressuring it to accept less-favorable terms for a previously agreed upon warrant-exchange offer, according to the Boston Business Journal.

Pentwater Capital Management, a $1 billion money manager based in Chicago, filed the suit in Delaware’s Court of Chancery. The merger’s expected close date is March 31.

According to Pentwater’s legal complaint, the hedge fund manager owns 9% of the public warrants, as well as an undisclosed amount of common stock issued by BPW. BPW is a special purpose acquisition company whose CEO is Gary Barancik, a partner with New York-based private-equity firm Perella Weinberg Partners.

Pentwater’s suit accuses Talbots and BPW of attempting to force warrant holders into accepting amended terms for a previously planned exchange offer that commenced March 1 and was scheduled to expire March 26.

In a regulatory filing late Thursday, Talbots said the suit is without merit and will be challenged “vigorously.”