The following is from the Wall Street Journal (click here to read in its entirety):
J.Crew in Talks to be Sold to Japan's Fast Retailing U.S. Retailer Is Seeking as Much as $5 Billion in a SaleWell, they did not plan to stay private for too long, now did they!?! ;) Interesting to see what ends up transpiring. At this point, nothing is certain.
Mike Spector And Dana Mattioli
February 28, 2014
The owners of J.Crew Group Inc. are in talks to sell the clothing retailer to Japan's Fast Retailing Co. for as much as $5 billion, a deal that would help the Asian company fulfill its ambition of becoming a global retailing powerhouse.
Fast Retailing, which owns the Uniqlo apparel chain, approached J.Crew's management about potentially buying the private-equity-owned business, said people familiar with the matter. J.Crew is seeking upward of $5 billion for the business, one of the people said. It remained unclear whether Fast Retailing would pay that much and whether the two sides have yet discussed a price.
The talks, which heated up this week, are at an early stage and could fall apart, this person cautioned. J.Crew also recently received takeover overtures from a couple other suitors, this person said. Their identities couldn't be learned.
The discussions come as J.Crew's owners, private-equity firms TPG and Leonard Green & Partners LP, are considering an initial public offering for the apparel chain later this year. In January, the company asked Goldman Sachs Group Inc. to begin work on a potential IPO, the people said. IPO planning hasn't progressed beyond that, one person said. ...
Mr. Yanai, 65 and one of Japan's richest men, has long been an admirer of J.Crew Chairman and CEO Millard S. "Mickey" Drexler, said people familiar with the matter. From 1995 until 2002, Mr. Drexler, 69, was CEO of Gap Inc. as sales rose to $14.5 billion from $4.4 billion.
Fast Retailing, which employs more than 23,000 people and has a market capitalization of about $36 billion, owns other brands besides Uniqlo, including Comptoirs des Cotonniers, Helmut Lang, Theory and Princesse Tam Tam. Uniqlo sells T-shirts, sweaters, and cold-weather gear to men, women and children, with prices as low as $9.99 for a pair of jeans. ...
Mr. Yanai studied Gap's retail aesthetic under Mr. Drexler, and used it as a model for Uniqlo's lineup of T-shirts, sweaters and khakis, the people said. Mr. Yanai was so consumed with Gap's look during the 1980s and '90s that he referred to Mr. Drexler as "professor" when the two eventually met in Tokyo, said a person with knowledge of the meeting. Mr. Yanai for some time had a photo of them together in his office, this person said.
In the past, Mr. Yanai and investment bankers discussed Fast Retailing buying Gap, which currently has a market value of nearly $20 billion, according to people familiar with the matter.
Mr. Drexler is known to have an eye for spotting trends early and an obsessive attention to detail. In 2011, J.Crew opened its first store in Canada. More recently, the company opened stores in London, aiming to take its classic American looks abroad. In addition to its namesake stores, J.Crew also has a brand called Madewell, outlet stores and a children's line.
Former Fast Retailing executives have said Mr. Yanai, who along with family members own more than a third of the company's shares, wrestles with two sometimes opposing wishes: his eagerness to make a splashy deal in the U.S. and his refusal to pay a penny more than what he perceives to be fair value.
As a result, former executives have said, the company has studied potential U.S. acquisitions, only to see Mr. Yanai scrap the deal at the last minute over small differences over price. Still, Fast Retailing has been snapping up American brands. In 2012 for example, it acquired an 80.1% stake in premium denim company J. Brand for $290 million.
But the company's U.S. expansion has been bumpy. In 2006, Uniqlo rolled out mall stores throughout the U.S. only to close them within a year because of poor results.
I personally think J.Crew will go public again, instead of being bought outright. In any case, I hope J.Crew can maintain "the things they do best" like their amazing customer service.
What are your thoughts? Do you think J.Crew will be bought out or go public? What do you hope they do?