(Reuters) - Shares of Talbots Inc (>> The Talbots, Inc.) plunged as much as 39 percent on Friday after exclusive negotiations with Sycamore Partners ended without an agreement for the private equity firm to buy the women's apparel retailer, which can now look for other deals.

Talbots said it is open to pursuing a transaction with Sycamore at $3.05 per share, which would value the retailer at around $215 million, if the private equity firm can provide certainty that it can get financing and close the deal. Talbots said Sycamore was not ready make a deal at this time.

Sycamore declined to comment. The parties' exclusivity agreement expired on Thursday.

Shares of Talbots were down 97 cents to $1.59 in Friday afternoon trading, having traded as low as $1.56.

Sycamore, which is Talbot's second largest shareholder with 9.95 percent of its shares, made the $3.05 offer earlier this month, up from a $3 bid it first made in December.

"When a large shareholder engages in the time and finances to do due diligence and ends up not proceeding forward, you have assumed (they're) not even going to get the $3.05," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

Kuby usually is a long-term investor, but sold all his shares in Talbots over the past year and a half.

Founded in post-war Massachusetts, Talbots built its reputation on its traditional pearls-and-classics fashions, but today is widely panned as dull.

Efforts to reach out to younger shoppers met with failure and ended up alienating its core shoppers - women over the age of 35. Talbots has been consistently lagging peers Ann Inc (>> Ann Inc) and Chico's FAS Inc (>> Chico's FAS, Inc.) and its sales have fallen for five straight years.

Total outstanding debt was $197.9 million as of April 28, compared with $86.8 million a year earlier.

The company is also looking for a successor to departing Chief Executive Trudy Sullivan who unsuccessfully tried to reignite growth at the chain with new store formats and cost cuts.

Industry watchers have long said the company should go private to fix its problems.

Talbots, which has about 540 stores in the United States and Canada, posted a slightly higher adjusted first-quarter profit on Friday as it worked on managing discounts, costs and inventory.

Sales fell 8.4 percent to $275.9 million in the first quarter ended on April 28, due in part to store closures. Comparable sales, which look at year-over-year changes at existing operations not slated to close, fell 3.8 percent.

Talbots has closed 90 locations so far and plans to close about 110 in all.

Talbots' board is being advised by Perella Weinberg Partners and White & Case LLP.

(Reporting by Nivedita Bhattacharjee and Jessica Wohl in Chicago, A. Ananthalakshmi in Bangalore; Editing by John Wallace and Tim Dobbyn)

By Nivedita Bhattacharjee

Stocks treated in this article : Ann Inc, Chico's FAS, Inc., The Talbots, Inc.