Things are starting to get ugly--or at least more complicated--for ex-spouses (and business partners) Tory Burch and Chris Burch.
A month ago, we reported that Chris had been forced to step down as Tory's co-chair in a "boardroom showdown," over the similarities between his brand, C. Wonder, and Tory Burch's eponymous company. But while Chris may have been booted from the company's board, he still owns a sizeable portion (about 30 percent) of its shares--something that's not as easily resolved.
According to the New York Post, Tory has been shopping around Chris' stake in the company, and the potential buyers include Coach and French luxury conglomerate PPR, which owns Gucci, Yves Saint Laurent and Boucheron. Partnering with Coach could produce a powerhouse in lower-priced luxury--which as Michael Kors' record-breaking IPO proved, is one of the best places to be in retail right now. If a deal is struck with PPR, on the other hand, Burch could be looking to elevate her brand. Whatever the case, sources tell the Post that Tory is "hoping to land a deal that values her company at upwards of $2 billion."
There's just one problem: Chris is reportedly demanding $600 million for his stake in the company, a figure that implies "an eye-popping value for the company of about 14 times its roughly $140 million in Ebitda, or earnings before interest, taxes, depreciation and amortization." In other words, he's demanding more than they're worth--and insiders say the "lofty figure," is discouraging buyers like Coach and PPR.
What's more, if Chris doesn't alter C.Wonder's concept to further differentiate it from Tory Burch's, as Tory demanded, a messy lawsuit (or worse, customer confusion) could be a looming problem for the brand--something which doesn't exactly have potential financiers reaching for their wallets. "No investor is going to come in [to buy the Tory Burch stake] while this C. Wonder situation remains unresolved," one source told the paper.
If there wasn't already enough pressure to resolve the issue, then this will surely do the trick.