As mentioned in the "J.Crew To Be Taken Private" post, J.Crew agreed to be taken private in a $3 billion deal.The following is an article over at Market Watch (click here for the article in its entirety):
Buyout of J.Crew Group, Inc. Investigated by Securities Lawyers at Goldfarb Branham LLPThis deal will likely go through. However, it will be interesting though to see what comes of this investigation.
By MarketWatch
November 29, 2010
Goldfarb Branham LLP is investigating whether the Board of Directors of J.Crew Group, Inc. breached their duties to shareholders by agreeing to sell the company to TPG Capital and Leonard Green & Partners, L.P. for $43.50 per share in cash. Concerned J.Crew investors are urged to contact securities lawyer Hamilton Lindley to ask about their rights and remedies due to this buyout at 877-583-2855 or hlindley@goldfarbbranham.com.
"Because the stock traded as high as $47 per share in of May 2010, and also because at least one analyst believes that the stock is worth $50 per share, we believe this deal is suspicious," said securities attorney Hamilton Lindley. "Our proposed class action lawsuit seeks to ensure that J.Crew shareholders receive full and fair information and the best price reasonably available in this buyout."
Goldfarb Branham LLP represents shareholders and whistleblowers nationwide and has been appointed by courts to serve as lead counsel on behalf of shareholders. The firm represents stockholders at no cost or liability to investors. For more information about this management led buyout, please contact the firm at 877-583-2855 or hlindley@goldfarbbranham.com.
What are your thoughts on this latest news? Are you a shareholder? If so, will you contact the law firm?
I'm not a shareholder, but I'm really interested in how this will develop the brand over the years.
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ReplyDeleteWell, I'm a spectator, not a stockholder and goodness knows, not a financial wizard. But I have noticed that a few onlookers have suggested that Mickey plans to develop the company creatively and artistically in private without having to be accountable to shareholders and a board of directors, and that in a few years he may even take the company public again. I fail to see anything but wishful thinking in this position, because if he remains with the company in any kind of executive role he will still be accountable to the other investors, who will have a much more direct financial interest than the shareholders (or as the protagonist of a now-defunct HBO series used to say, they know where he lives). Moreover, in looking at Mickey's personal financial stake in the transaction, I find his age hard to ignore. Mickey is 66. With a lot of money in the bank and a large personal real estate portfolio, his motivation may be to relax a little and step out while he can. Not that there's anything wrong with that in the abstract, but the theory behind the lawsuit seems to be that when you are in Dear Leader's position in a public company, your obligation to your shareholders is to get the best possible price for all of the shares, not the quickest and best possible deal for yourself. It will be interesting to see if another possible buyer steps up during the "look-around" period.
ReplyDeleteI'm also not a shareholder and will be watching this with a lot of interest. Part of it sounds like a quick 'fix' to get JC out of the eye of scrutiny for a while - they had a great year and a half after their IPO before the great website CF of 2008. Remember the public apology that was printed in one of the Fall 08 catalogs (October, maybe)? That took a long time to recover from, and once the site was back up and running the ruffles overload and declining quality issues really came to a head. The optimist in me thinks that going private would be a good way to fix some of these issues, but the cynic in me thinks that MD will take his golden parachute and peace out (which wouldn't necessarily be a bad thing, but sometimes the devil you know...). Anyway, I'd love to hear what more JCA's think. I thought this would have gotten more attention last week but other things got in the way - thanks for posting on it again, Alexis!
ReplyDeleteHistorical perspective from John Carney. "The Weird Love Affair Between TPG and J.Crew"
ReplyDeletehttp://www.cnbc.com/id/40338370/The_Weird_Love_Affair_Between_TPG_and_J_Crew
I wouldn't discount MD's motivation due to his age. 66 is afterall the new 56! Lol! I know a few 70 year olds who have no desire to retire and are going strong running a business.
ReplyDeleteI enjoy reading about this situation even if I don't understand the ins and outs of finance, etc.!! I just hope my favorite retailer doesn't go down the tubes because of greed or behind-the-scenes personality conflicts. In all this time I have yet to become so attached to another 'brand'.
I'm interested to see this all play out too!
ReplyDeleteI'm not a shareholder. Thought about becoming one about 2 years ago, but felt "meh" about where the quality/variety of clothes was going so I passed.
ReplyDeleteSo some believe the stock is worth as much as $50.00? Hmm, well, if the quality had remained, then I think I could see their point. However, as a long term shopper (for 20 years since my teens), I've seen a decline in the quality and an increase in the prices of items. Furthermore, I have seen an overwhelming emphasis on "disposable" trendy fashion items, some similar to Arden B, Bebe & Forever 21's offerings. I think that when MD took over, there initially was a nice balance of classic & trendy items that one could mix up to give their outfits a little preppy edge which is how I like to dress. Now the emphasis is more on trendy items. Frankly, I have no desire to wear 15" mini skirts. Where are the well tailored blazers and coats? What happened to the great quality leather bags a la Borge G? How about the leather lined/soled shoes? Why in the world would I purchase cheap leather shoes with man made lining and man made soles in the $150-$300 range?
I really wish JC would offer shoppers the option of filling out a survey. It would be interesting to see what real women ACROSS the nation like/dislike about JC. Let the shareholders see the results. Didn't someone mention something about an analyst blaming warm weather and an overabundance of sweaters as the reason for decreased sales? At the time, I thought, how well does this person know the history of the items produced by JC? Does he/she regularly enter a JC store to personally see what the clothes look like, who's shopping there, how the clothes compare in design and quality to previous years? Anyway, I agree with others who have desired a review feature on the website. Either a number of us, including myself, are crazy and there truly has not been a decline in quality or there is truth to our postings about items developing holes after first use, seams unraveling, etc.
Perhaps a survey would add additional insight to their decline in sales. I do agree with others that the stock price had a boost courtesy of the frenzy surrounding the First Lady wearing JC items. Perhaps those fans then realized that the clothes didn't hold up as well as they thought they would for the price paid and the frenzy slowed. Who knows?
If the quality and uniqueness returned to prior standards, I would gladly pay full price for the items and return to buying a number of items from JC such as shoes and bags. Thank you, Alexis.
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ReplyDeleteTo follow what wellfedfred said, I wonder if Mickey is thinking that what he *is* getting is the best possible price for JCG. I think taking the company private will allow him to make some (hopefully good) changes without public scrutiny. Easier to convince a smaller group of well-bankrolled investors about your changes without the sway of public opinion when you are private. I think this move may be more about protecting his reputation. It can't be easy for a guy like MD to hear how he was ousted from GAP in the same breath as how he led a resurgence of the brand. I'm thinking he's wanting to prevent this same thing happening with JCrew.
ReplyDeleteI still have some of my JCG shares, but I bailed before the announcement (still was able to sell higher than I bought, so all is good there). I continue to hold out hope that there will be a turnaround of some kind: more consistent (and fair pricing), better quality, cleaner designs, better customer service, etc.
If Mickey wants to dabble in things creatively, I wish he would just take his money and do what Reed Krakoff did - just make a spin-off of your parent company and mess with the spin-off. Too many changes at once could lead to a disaster. JC needs a well thought out plan.
My apologies for the duplicate posting. I'm receiving error messages from IE. I'm trying to delete the duplicate one, but have been unsuccessful.
ReplyDeleteI am not a shareholder, but this turn of events has definitely piqued my interest. I know all of y'all are sick of my incessant harping about the MD and JL press machine , but since it began ramping up, say eighteen months ago, I couldn't help but have the feeling that it was a smokescreen for some other goings on. As the quality declined and the company seemed to be lost at sea in the Sequin Triangle, I thought maybe all the PR was to distract everyone, "It's OK if my brand new $42.50 tee has a hole in the shoulder because those REALLY COOL people at JCrew designed it." But when DH informed me of the JCG deal-well, now I understand what all the schmoozing was about. I think Silver Lining is right on the money carbon dating the decline of JC's fortunes to the online meltdown. When I think back to when I started noticing a decline in the quality of their tees, the material was very thin, it stretched out terribly, and was very efficient at developing holes, it was the spring/summer of '09. I know little about the fashion industry, but I would hazard a guess that designs would go into production, say six months before they hit the stores? That would make the inception of the holey tees in the fall/winter of '08, a few short months after the website debacle. So, here we are today. My bet is that MD has been planning this for awhile, partially to cash in, but also to save face. At this point JC reminds me of a racehorse that had a great couple of years at the track with an owner that appreciated him, but then a bad trainer got a hold of him, ran him in a few races that didn't fit his style and now is trying to trade him off to anyone that will pay his price. I really do hope that someone can turn all this around and bring JC back to its former glory. As for MD, I trust that he will do what's best for him, as I guess he should, but I've never bought into the legend.
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ReplyDeletecuriouser and curiouser:
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CMG and David - awesome posts! I agree that reviews of the items on the site would be invaluable to JCA's, perhaps notsomuch for JC and their public perception. I have most definitely noticed a decline in quality almost across the board. I have purchased many older JC items via eBay ('04-'07) that look impeccable.. and these are USED clothes, shoes, and bags. I couldn't unload most of the '09-'10 pieces if I wanted to because they just look like rags. Even the usually reliable (for me)jackets, coats, and pencil skirts have been subject to shortcuts in construction, and that may be fine for some, but to see this noticeable decline in quality coupled with increasing price points is just plain disappointing.
ReplyDeleteI would love to see a comprehensive survey about customer expectations and perceptions. I think that we could easily guess the themes that would rise to the top - and perhaps JC does too, and instead is deciding to engage in some willful ignorance.
I have a feeling JCA and other JCrew-related blogs may be giving JCrew all the info they need on customer feedback. And I do think they are listening/responding to a certain extent, but profits are always the bottom line. It will be interesting to see how everything plays out. I've had three conversations with different SAs/PSs in the past couple of weeks who have lamented various things to me--gaudy (yes, her word) ts; disappointing holiday offerings; Jenna's having too much free reign on designs and needing to reign it in a bit. Interesting to say the least!
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