J. Crew Extends Buy out Period to Appease Shareholders

J. Crew

Model/actress Lauren Hutton teamed with J. Crew to offer style tips to its consumers.

New York—Although apparently no other suitors have come forward to buy the retailer, J. Crew Group agreed to extend its “go-shop” period by one month, giving prospective buyers extra time to enter into negotiations to buy the specialty retailer.

J. Crew agreed to extend the period to solicit competing offers until Feb. 15 as part of a settlement with some shareholders who had filed a lawsuit in Delaware challenging the $3 billion deal proposed by private equity firms TPG Capital, Leonard Green & Partners and Mickey Drexler, J. Crew’s ceo. Saying that Drexler and other company executives stand to make millions of dollars off the buyout, the shareholders argued that the company failed to properly shop around to get the highest bid.

In addition to the go-shop extension and a $10 million settlement with the shareholder plaintiffs, the parties agreed that TPG and Leonard Green would accept a smaller $20 million payment if J. Crew accepts a competing offer. The original $27 million fee, equal to about 1% of the purchase price, was already lower than the typical breakup fee. TPG and Leonard Green offered $43.50 a share for J. Crew on Nov. 23.

Special Meeting March 1

The Wall Street Journal had reported that both Sears Holdings and Urban Outfitters were interested in J.Crew, but apparently decided against making an offer. Attorneys for the shareholders said the additional time may encourage other bids especially since J. Crew’s fourth quarter sales numbers—including holiday figures—won’t be ready until Jan.31.

The company has now scheduled a special meeting on 1 March, when its shareholders to consider and vote upon the plans. “Shareholders of record” would also be able to speak out about Drexler’s role in the plan to take the company private. Drexler has been criticized for his role in the TPG sales which could garner him some $16 million profit if the sale is approved.

Like this? Share it!