Tuesday, January 18, 2011

J.Crew Close To Settling Lawsuit

J.Crew's deal to go private is almost complete, as they will be addressing the shareholder lawsuit. The following is an article from Bloomberg (click here to read in its entirety):

J.Crew Said to Be Near Settlement of Lawsuit Tied to $3 Bilion Takeover
By Jason Kelly, Jeffrey McCracken and Matt Townsend
January 17, 2011

J.Crew Group Inc. is close to settling a shareholder lawsuit over its proposed $3 billion takeover by private-equity firms TPG Capital and Leonard Green & Partners LP, said two people with knowledge of the matter.

As part of the settlement, J.Crew would extend the period to solicit competing offers until Feb. 15 and add provisions that make it easier to accept a rival bid, said the people, who declined to be identified because the information isn’t public. An agreement, which would also include a $10 million payment to plaintiffs, may be announced as soon as today, the people said.

J.Crew didn’t get any competing bids to top TPG and Leonard Green’s bid for the retailer by the original Jan. 15 deadline, people familiar with the matter said on Jan. 16. Sears Holdings Inc. and Urban Outfitters Inc. had been studying possible offers, people said earlier this month. Most go-shop periods don’t result in rival bids.

TPG and Leonard Green, which are offering $43.50 a share for J. Crew, would waive their right to match any competing bid at or above $45.50 a share as part of the settlement, the people said. Shareholders have filed complaints questioning whether Chief Executive Officer Millard Drexler, who began negotiating with the buyout firms months before the deal became public, obtained a fair price from TPG and Los Angeles-based Leonard Green.

Margot Fooshee, a spokeswoman for J. Crew, declined to comment.

Breakup Fee. ...As part of the settlement, TPG and Leonard Green would also accept a smaller $20 million payment if J. Crew accepts a competing offer, the person said. The original $27 million fee, equal to about 1 percent of the purchase price, was already lower than the typical breakup fee.

TPG, based in Fort Worth, Texas, previously owned J. Crew, and hired Drexler in 2003 to run the company. He has said he will stay as CEO if the buyout offer succeeds.

The transaction needs approval from a majority of shares outstanding. As part of the lawsuit settlement, J.Crew would exclude Drexler’s shares from the count, the people familiar with the matter said. Drexler would also be bound to a two-year non-compete agreement if he rejects a deal that is equal to or better than the TPG-Leonard Green offer, the people said. ...
Wow! So it looks like J.Crew, along with TPG & Leondard Green, will be moving forward quite nicely.

What are your thoughts on this latest news? Do you think there will be anymore hiccups now that J.Crew is on the path to privatization? Do you think going private is still the right move for J.Crew?


  1. I guess the saga continues and we'll know for sure by next month. With all these settlements and payments owed, will there be more sales like the one we had - 40% off fs?

  2. I'm looking forward to more sales, they'll need the cash to pay the lawyers and fund the settlements!

    The saga continues and my word verification is novel, no joke. How DO they know.

  3. Hey WFF, my word verification is oplisem. Sounds like someone was drunk when they were trying to spell optimism, which is all I have for j.crew at this point!

  4. I'm really curious to see what direction the brand takes once they go private. I like the "new classics" that they are featuring online and hope that means they are moving more in that direction and less trendy, although some trends are to be expected and certainly welcomed by those who follow fashion more closely than I do, which wouldn't be hard!

    Ha! My verification word is "treki". Isn't that "geek" in another language?

  5. Currently watching UK getting the crap beat out of them by Alabama, so I'm not very optimistic about anything. I really hope MD & Company can get all this behind them so's they can get back to the business of making great clothes. Methinks they've been pulling the behind-the-scenes strings for quite awhile, trying to engineer this deal, thus all the media hype earlier this year, hoping it would prop up their sales. I don't know about y'all, but I get a fair amount of fashion magazines and it seems the product features and celeb interviews aren't showcasing JC nearly as much as they were. Just my usual suspicious nature I guess. Realistically, I would be thrilled if they'd just resolve their quality issues and get the designers to come up with some styles that would flatter the general population rather than just themselves. Please excuse all my run-on sentences, it's hard to entertain lucid thought when Jimmy Dykes mouth is running nonstop.


Dear J.Crew Aficionadas & Aficionados: Please feel free (and encouraged) to share your thoughts and opinions. :) However, please note that this is still a personal blog. So comments that are considered inappropriate (e.g. obscene, racist, homophobic, personal attacks, rude, and just plain mean) will be removed.

And now back to J.Crew! :)