Sun Capital leads $1.2bn Mervyn’s buyout

The Florida distressed-buyout specialist has teamed with Cerberus Capital and others to buy the department store from Target.

Sun Capital Partners is leading Cerberus Capital Management, Lubert Adler and Klaff Partners in the acquisition of Mervyn’s, a chain of department stores in the western US, for $1.2 billion (€1 billion).

Mervyn’s is currently a division of Target, a publicly traded company that runs the Target chain of stores.

Mervyn’s, based in Hayward, California, has 257 stores throughout the western and southwestern US. Sales of the division last year were roughly $3.3 billion. Diane Neal will remain president of the stores.

The private equity group led by Sun Capital is putting approximately $400 million in equity into the deal, according to a press release.

Michael Kalb, a principal at Sun Capital, led the deal for the firm.

While Cerberus has long been a dominant player on the distressed scene, Sun Capital is better known for its middle-market distressed activity. However, the firm has been aggressively expanding recently. Last year, the firm opened offices in New York. This year, the firm launched a new fund, Sun Capital Securities Fund, to make minority and non-control investments, in addition to its core control buyout strategy.

Sun Capital was founded by managing directors Rodger Krouse and Marc Leder. Prior to forming Sun Capital in 1995, Krouse and Leder were both senior vice presidents at Lehman Brothers in New York.

In May, Sun Capital purchased a decorative panel facilities company from Louisiana-Pacific Corporation.

Lubert Adler is a $7 billion real estate fund management firm which has a joint venture with Klaff Partners, a retail business specialty firm.