Thursday, February 3, 2011

J.Crew's Time To Go Private Will Wait

"Thanks!" to many of you, including WellFedFred (in this post), who shared the following news.

Well, well, well. Just when you think the story about J.Crew's deal to go private has an end, another surprise pops up.

The following is an excerpt from New York Magazine's the Cut (click here for its entirety):
J.Crew Accuses Angry Shareholders of Being Greedy
By: Amy Odell
February 2, 2011

Shareholders unhappy with J.Crew's plan to go private, and the settlement they agreed to after suing the retailer, are trying to get more money from the chain. Having accused it of wrongly manipulating the settlement in their favor, they're now asking for "very significant monetary recovery" from J.Crew. J.Crew's lawyer has responded in a letter to the judge ruling on the case: "Having largely reaped the fruits of their bargain, plaintiffs now want to renege."
What happened to cause this? For a quick explanation (from here):
J.Crew reached a settlement with shareholders who sued the company after it announced plans to sell itself to a private equity firm for $3 billion. Under the settlement, J.Crew agreed to extend the go-shop period to February 15 to solicit rival bids that shareholders could vote on. However, a lawyer for the shareholders now argues that J.Crew manipulated the process by scheduling a vote on the bid for March 1 and announcing the results of the initial go-shop period, during which no other bidders emerged.
For more articles regarding this, check out:
It's interesting that J.Crew believes its shareholders are greedy. Are the shareholders the only ones? Some might argue that certain members of J.Crew and its buyer (in initial dealings) were acting greedy too.

J.Crew could have had a smooth transition to private by now if J.Crew and its Buyer (TPG Capital and Leonard Greene & Partners) were transparent from the very beginning (having the entire board aware of the deal to go private, fair evaluation of stock for shareholders, etc.). Because of those actions, the Buyer and J.Crew's reputations have been slightly damaged. And now there is talk that the Buyer & J.Crew will sue shareholders. Even if they win, there will be a significant loss.

I still have no doubt that J.Crew will be private, but its now a question of when and how much additional money it will cost them.

What are your thoughts on the deal? Are you surprised that this latest development is now occurring?
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10 comments:

  1. silver_liningFebruary 3, 2011 at 7:35 AM

    Oh boy...

    ReplyDelete
  2. tmFebruary 3, 2011 at 8:08 AM

    Yup, the shareholders are the greedy ones. mmmkay...

    Transparency fail from the wonderboy Millard Drexler.

    ReplyDelete
  3. DaraFebruary 3, 2011 at 9:00 AM

    I for one am wondering what impact all these legal fees, settlements, etc. may have on the quality of the merchandise offered in the coming seasons. Maybe they take a leap and start selling tees with holes already in them? ;)

    ReplyDelete
  4. M-a-m-a-mFebruary 3, 2011 at 10:58 AM

    Greedy? I guess we're all greedy to demand quality clothing when we pay $135 for a shirt. Millard, you're the one who is greedy.

    ReplyDelete
  5. AnonymousFebruary 3, 2011 at 11:34 AM

    Just wanted to ask again because no one had suggestions last week: the starry night mini (black/sequins). Can anyone give me some styling suggestions to make it casual? I love this skirt and want to get my moneys worth. I don't want it to sit in my closet unworn. Thanks

    ReplyDelete
  6. UnknownFebruary 3, 2011 at 1:21 PM

    I'm a longtime reader, but I had to chime in on this one. Suing the shareholders is worst thing for "jcrew and Buyer" to do. The lawyers, once again, will be the winners here. How much money will be tossed at them to end this tiff? Your point about transparency leading to a smooth transition is so correct that these shenanigans look like spoiled brats fighting over foolishness.

    ReplyDelete
  7. RoseFebruary 3, 2011 at 1:34 PM

    J. Crew will sue its shareholders? Isn't that like 'bite the hand that feeds you?'

    ReplyDelete
  8. jcrewphdFebruary 3, 2011 at 4:25 PM

    I couldn't agree more about being transparent from the first place. If Micky Dexler and the Buyer had come out clean in the first place, the shareholders wouldn't have felt so cheated in the first place.
    I just hope all these law suits does not bring our beloved brand down.

    ReplyDelete
  9. mommydearestFebruary 3, 2011 at 4:48 PM

    Oh no. This doesn't look like it will end well.

    ReplyDelete
  10. objectloveFebruary 21, 2011 at 6:52 AM

    Private equity vampires suck all the profit from a company, then dump it. It is always about: money.
    All of us have noticed the failing quality of J Crew clothing the past few years - that is greed within the company. Very sad for the J Crew customers who have remained loyal to the company for 20 years or so...

    ReplyDelete

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