Chico's FAS: Sycamore in talks to buy the apparel retailer

Private equity firm Sycamore Partners is in talks to buy apparel retailer Chico's FAS Inc and is trying to secure debt financing for a deal that could reach $3 billion, according to two people familiar with the matter.

Sycamore has an in-principle agreement to acquire the company subject to securing financing, one of the people said. Some banks, however, have been reluctant to meet Sycamore's demands for a lot of debt to increase returns on the deal, both the sources added.

Chico's shares were up 10 percent in extended trading on Tuesday after the Wall Street Journal first reported the potential deal.

The sources asked not to be identified because the talks are confidential. Sycamore declined to comment. Chico's FAS was not immediately available for comment.

Chico's, based in Fort Myers, Florida, operates 1,547 stores in the United States and Canada, selling private label women's casual clothing and related accessories.