Brookstone Inc., the retailer known for massage chairs and electronic gadgets, is in talks to be acquired by Spencer Spirit Holdings, a deal that may include a prenegotiated Chapter 11 bankruptcy filing.
The company, which operates 240 locations in malls and airports, is working toward an agreement with Spencer, according to a statement today. Its stores, catalog, website and wholesale channels will continue to operate under the Brookstone name, and current employees will remain in place.
Brookstone, based in Merrimack, New Hampshire, has struggled with online competition and sluggish consumer spending -- the same challenges that torpedoed Sharper Image Corp. in 2008. For Spencer, a merger would bring a new growth opportunity for a company that sells novelty T-shirts, gag gifts and costumes. It has 644 Spencer stores in the U.S. and Canada, and operated more than 1,000 seasonal Halloween shops last year.
“While we have implemented various successful cost-cutting initiatives, the search for a strong strategic partner who shares our vision and passion was a natural progression,” Brookstone Chief Executive Officer Jim Speltz said in the statement. “We think we have found that in Spencer Spirit and are excited about the opportunity to begin leveraging the resources of the two companies.”
Terms of the prospective deal weren’t disclosed. Spencer is expected to pay about $120 million for Brookstone, which has about $140 million in debt, the Wall Street Journal reported yesterday.
K&L Gates LLP is serving as Brookstone’s legal adviser for the restructuring, while Deloitte CRG is providing financial guidance. Jefferies LLC, its investment banker, also has given advice on the restructuring and sale of the company. Spencer Spirit, meanwhile, is using Cole Schotz PA as its legal adviser and PricewaterhouseCoopers LLP for financial help.