Victoria’s Secret & Co.: A Strategic Defense Play in a Volatile Retail Landscape

Victoria’s Secret & Co. (VSCO) has taken a bold defensive stance against the aggressive accumulation of shares by BBRC International, a move that underscores its commitment to preserving long-term shareholder value. With BBRC’s Hart-Scott-Rodino (HSR) waiting period set to expire on May 21, 2025, the company’s newly implemented shareholder rights plan and credit agreement amendments position it as a compelling investment opportunity amid retail sector volatility. Here’s why investors should take note.

The Shareholder Rights Plan: A Preemptive Strike Against Undervalued Takeovers

On May 20, 2025—one day before BBRC’s HSR waiting period expires—Victoria’s Secret announced a limited-duration shareholder rights plan (“poison pill”) to block hostile takeovers. This defensive mechanism, effective immediately and expiring in May 2026, triggers if any party acquires 15% or more of VSCO’s common stock (or 20% for passive investors). Key implications include:

1. Blocking BBRC’s Play for Control: BBRC, controlled by billionaire Brett Blundy, currently holds ~13% of VSCO’s shares. Once its HSR waiting period expires, it could legally increase its stake to 49.99%—a move that could destabilize governance. The rights plan forces BBRC to either negotiate fairly or face shareholder dilution, ensuring all stakeholders receive an appropriate premium.
2. No Dead-Hand Clauses: Unlike many poison pills, this plan excludes restrictive “dead-hand” provisions, allowing future boards flexibility to adapt. This signals confidence in long-term governance.
3. Market Timing: The board’s swift action just before BBRC’s HSR deadline highlights its strategic foresight.

The Credit Agreement Amendment: Shoring Up Liquidity Amid Uncertainty

While the shareholder rights plan addresses immediate takeover risks, Victoria’s Secret’s May 2023 credit agreement amendment ensures financial resilience. Key provisions include:

1. Transition to SOFR: Replacing LIBOR with the Secured Overnight Financing Rate (SOFR) aligns VSCO with global regulatory standards, reducing interest rate risk and ensuring compliance.
2. Preservation of Liquidity: Existing loans retain their terms until maturity, avoiding abrupt rate hikes. New loans must use SOFR or the Alternate Base Rate (ABR), maintaining stable borrowing costs.
3. No Waiver of Rights: The amendment preserves all original Credit Agreement covenants, including collateral requirements. This structure safeguards against liquidity shocks.

Why Investors Should Bet on VSCO Now

1. Protection Against Undervalued Takeovers: BBRC’s accumulation tactics—combined with its recent entry into the lingerie market via its Léays brand—pose strategic risks. The rights plan ensures no buyer gains control without compensating all shareholders.
2. Retail Sector Resilience: Despite a 43.8% YTD stock decline in 2025, VSCO’s global footprint (1,380 stores in 70 countries) and brand portfolio (Victoria’s Secret, PINK, Adore Me) remain undervalued. The rights plan buys time to capitalize on recovery opportunities.
3. Board Foresight: The simultaneous timing of the rights plan and credit amendment reflects a board focused on both defensive and operational stability.

Risks to Consider

• BBRC’s Intentions: While the rights plan creates barriers, BBRC could escalate its strategy, such as a contested bid or legal challenges.
• Retail Market Volatility: Declining consumer spending and supply chain disruptions remain headwinds.

Conclusion: A Strategic Hedge Against Retail Uncertainty

Victoria’s Secret has positioned itself as a defensive play with upside potential. The shareholder rights plan neutralizes takeover risks, while the credit amendment ensures liquidity stability. With shares trading at a 43.8% discount year-to-date and the board’s proactive stance, VSCO is primed for a rebound.

Investors seeking stability in a turbulent retail sector should consider VSCO as a high-conviction long-term play. The combination of defensive measures and operational resilience creates a compelling case for a valuation rebound within the next 12 months.

Act now—before the market catches up to VSCO’s strategic moves.