"Thanks!" to so many of you, including those who participated in the discussion from two posts this past week (here & here), as well as wellfedfred (in this post), Suzy (in this post), ThirtySelvedge, Ellen, Naomi, & Kim, who shared the following news. J.Crew's management is in the works to be taken private.There are lots of articles discussing this news including:
- J. Crew makes deal to be taken private for $3B
- Mickey Drexler Plowing $100 Million of His J.Crew Stock into Company Buyout
- Mickey Drexler to reap 15 times his J. Crew stake
- Mickey Drexler to profit from J. Crew buyout
- Lessons from J. Crew: How to Protect Investors in Management Buyouts
- Tripp Levy PLLC Represents J. Crew Shareholders In Connection With Management Buyout
J.Crew shareholder sues over buyoutHmmm. Not sure how I feel about this news as both a customer and shareholder (who purchased stock in the high 40's).
By Bloomberg News
November 27, 2010
J.Crew Group Inc. and San Francisco's TPG Capital were sued by a J.Crew shareholder seeking to block the clothing retailer's proposed $3 billion buyout, which he said undervalues the company.
The acquisition of J.Crew by TPG and Leonard Green & Partners LP for $43.50 per share "materially undervalues" the company and is unfair to stockholders, shareholder Arnold Church said in a complaint filed Wednesday in New York State Supreme Court.
"In short, the proposed acquisition is designed to unlawfully divest J. Crew's public stockholders of the future growth potential of the company by engaging in an unfair process riddled with self-dealing," the complaint states.
J.Crew announced the buyout by TPG and Leonard Green on Tuesday. The lawsuit seeks class-action status on behalf of J.Crew shareholders, according to the complaint. Besides J.Crew and TPG, the complaint names as defendants Leonard Green and J.Crew officers and directors, including Chief Executive Officer Mickey Drexler.
I know Mickey will be making lots of money off this deal, but will the shareholders?
What are your thoughts on this latest news? Do you think this is the right move for J.Crew? What do you think this mean for shareholders?
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ReplyDeleteThis is very interesting news indeed. Generally, it is very difficult for a shareholder to be successful in a suit against board members. But the fact that Drexler is making out like a bandit with this deal does wreak of self-dealing. He might have a conflict of interest. I am very curious about what affect, if any, this will have on our beloved J.Crew.
ReplyDeleteI think it's a win win situation for Mickey either way but it's interesting to see how this lawsuit is going to affect JC. I guess Mickey is talented, but is one person worth that much? I just think it's outrageous amount of $$ he will be profiting when we're seeing disposable clothing and decline in quality.
ReplyDeleteI just hope everything turns out for the best of JC and us, the loyal customers, as I just cannot take any more hole-y tees, raw edges, unlined blazers, pilling sweaters, plastic soles among other cost cutting measures.
As they say in all those good British murder mysteries,"Who has the most to gain?" This buyout smells to me, but that's probably my naturally suspicious nature wrinkling up its nose. Not to mention the press releases- "missing the mark with too many heavy sweaters in a warmer than average" Fall season? I'd love to know the origin of that piece of business journalism polyester/acrylic! Even the buyout press releases ignore the real problems that we're all so familiar with this last year and a half. But, since they didn't call me and ask my opinion, all I hope is that once again, the JCrew label will be synonymous with quality classics with a twist.
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ReplyDeleteI have no knowledge of these sorts of business dealings, but I also wondered if it isn't a bit fishy when I heard the news. For all we know, the strategy to take it public and then private again within X number of years could have been preplanned. The dollar will inspire people to do amazing things. Just don't lie on the stand or you'll be calling Martha for tips on surviving the clink.
ReplyDeletePersonally, I think Mickey did this to save himself from getting fired. If J Crew was going downhill with profits dipping, the board would eventually have to reprimand somebody, and that somebody is Dear Leader MD. Perhaps Jenna too. And personally I don't think the clothes are not going to get that much better -- with the exception of a few retailers I will not name here, quality decline is going on EVERYWHERE. Yesterday my favorite Zara coat developed a big hole on the shoulders because the seams were not reinforced. ARGH! That's the cost of having disposable clothes made in China!
ReplyDeleteA few interesting notes from this announcement;
ReplyDelete1 - Yes senior management is cashing in on this deal. That's capitalism at it's finest and completely understandable.
2 - I view this in a slightly different light. By going private, ownership and management position themselves to expand their B&M, online and sister stores aggressively without having to worry about the economy, quarterly results (Wall Street & Investors) etc.
3 - Jenna takes a hit? Comments from analysts include very specific concerns about the Women's line not selling well;
Drexler may be looking to go private as J. Crew adapts to changing consumers’ tastes and deals with inventory that isn’t selling well, said Nathan Brown, an analyst at J. Crew shareholder Waddell & Reed Financial Inc.
“You’ve got too much of the wrong stuff and the stuff is still coming in,” and Tight Jeans
J. Crew didn’t change its fashion fast enough as it kept tops over-embellished with ruffles and the fit of its jeans too tight, said Laura Champine, an analyst for Cowen & Co. in New York. She said she realized the company had a problem last month when it reduced prices on all sweaters by 20 percent.
“I don’t think there is anything broken here,” said Champine, who has an “outperform” rating on J. Crew shares. “A lot of LBOs you take them private and really change things and bring them back public once you fix them. This is the kind of thing that rights itself by next year.”
My prediction - TPC and Leonard Green will take them public (again) within 3 years once the economy is on more solid footing. I'll be a buyer.....