Victoria’s Secret owner L Brands Inc. said it reached an agreement with Sycamore Partners to cancel their previous pact for the private equity firm to buy a majority stake in the lingerie chain.

Sycamore Partners and L Brands also agreed to settle all pending litigation, the company said in a statement. Bath & Body Works, also owned by L Brands, will be operated as a public company, while Victoria’s Secret will be run separately. Shares of L Brands fell as much as 18 per cent to US$9.82 in late trading on Monday.

The February deal was thrown into jeopardy in late April when Sycamore sued to terminate the transaction, arguing that Columbus, Ohio-based L Brands violated the terms of the agreement by failing to pay rent and furloughing thousands of workers amid the coronavirus pandemic. L Brands counter-sued to enforce the terms of the agreement.

The agreement brings an abrupt end to one of the highest profile deals this year in the retail world and charts an uncertain path for a storied American brand. Victoria’s Secret had been a pioneer in mass-market lingerie, but the business has declined in recent years amid controversy and changing consumer tastes.

Now L Brands, which has struggled to turn around the struggling lingerie brand, will be going at it alone again.

“As part of L Brands’ strategy, the company remains committed to establishing Bath & Body Works as a pure-play public company and is taking the necessary steps to prepare the Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK businesses to operate as a separate, standalone company,” the retailer said.

The lingerie company said it would provide further details on its plans for Victoria’s Secret during an earnings call on May 21.

L Brands said longtime leader Leslie Wexner will step down as chief executive officer and chairman. Andrew Meslow, who runs L Brands’ Bath & Body Works, will become CEO of the parent company and join the board, while Sarah Nash will become chair.

Neither party will be required to pay the other a termination fee over the cancelled deal, according to a separate statement from Sycamore.