US fashion retailer J Crew Group Inc might close a deal to be for 2.8 billion dollars worth of shares, at 43.50 dollars a share, by TPG Capital and Leonard Green & Partners, said sources close to the negotiations.
There is a possibility for the deal to be announced on Tuesday when the J Crew is to present third quarter financial results. The sources declined to reveal their identity to the public as the negotiations were not disclosed.
The same sources stated that the agreement will bring a “go shop” window, thus allowing J Crew to solicit superior offers. The go-shop time would give investors a chance to see how the retailer performs during the holiday season.
J Crew sells high-end apparel for men and women and has a total market capitalization of 2.3 billion dollars. Up to now, the company’s stock plunged 19 percent this year. Should the figures for the takeover be confirmed, a price of 43.50 dollars per share would only bring the company a premium that is just little over 15 percent higher than the closing price on Monday, of 37.65 dollars.
According to the aforementioned sources, following the deal, TPG would own 75 percent of the company, while Leonard Green would have 25 percent. Other sources speculate that Millard Drexler, J Crew’s Chairman and CEO, might also take part in the transaction.
J Crew was formerly owned by TPG, and it bought 88 percent of the shares for some 500 million dollars in 1997, before the IPO in 2006.
The company announced a third quarter and full year forecast below expectations in August. J Crew has seen revenues plummet each quarter, starting with January 30 this year.
