Shares rose 5.7% to C$3.18, or approximately $2.35, following the announcement. The stock remains well below its 2017 IPO price of C$12.

Searchlight Capital acquired a majority stake in Roots in 2015 before taking the company public two years later. Since then, the retailer has faced persistent margin pressure despite maintaining positive free cash flow.

An analyst note cited by Bloomberg suggested a potential take-private transaction could value the company between C$4 and C$4.50 per share, or roughly $2.96 to $3.33, based on comparable retail multiples.

Roots operates more than 100 stores in Canada and over 100 partner-operated locations in Asia. The brand has struggled to replicate domestic success in the US market, closing most American locations in 2020.

For private equity investors, the situation underscores ongoing challenges in listed consumer assets acquired during stronger retail cycles, with sponsors reassessing exit strategies amid shifting demand and margin volatility.