Brookstone Inc., the owner of the specialty electronics and lifestyle chain, is preparing to file for Chapter 11 bankruptcy protection as early as Sunday, reports The Wall Street Journal. The company is also in talks to be acquired by Spencer Spirit Holdings for $120 million.
Under the acquisition deal, Brookstone's stores, catalog, website and wholesale channels will continue to operate under the Brookstone name, and current employees will remain in place, reports WSJ. The move comes as Brookstone struggles under $140 million in debt and has struggled with weakening sales. In September 2012, the chain had $31.6 million in cash. By September 2013, that had fallen to just $1.1 million.
For Spencer, the merger would mark the beginning of a new era for the company, which owns 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 CEO Jim Speltz said in a 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 deal were not disclosed.
Brookstone, which operates 240 retail locations, was taken private in 2005 by a group led by Osim, Asia's biggest maker of massage chairs, in a $445 million deal.
Brookstone would be the fourth major retailer affected by bankruptcy this year, behind Quiznos, Sbarro, Dots and Loehmann's.
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