J. Crew Said to Get No Offers to Rival $3 Billion TPG, Green Bid

J. Crew Group Inc. didn’t get any competing offers to top a $3 billion bid for the New York clothier from TPG Capital and Leonard Green & Partners LP, said two people familiar with the matter.

No additional offers were submitted by the Jan. 15 deadline, said the people, who declined to be identified because the information isn’t public. Sears Holdings Inc. and Urban Outfitters Inc. had been studying possible bids, people familiar with the matter said earlier this month.

TPG and Leonard Green in November offered $43.50 a share for J. Crew in a transaction valued at about $3 billion. Shareholders filed more than a dozen lawsuits questioning whether Chief Executive Officer Millard Drexler, who began negotiating with the buyout firms months before the deal became public, obtained a fair price from TPG and Los Angeles-based Leonard Green.

J. Crew would have paid TPG and Leonard Green $27 million had it accepted a higher offer. The fee, equal to about 1 percent of the purchase price, is lower than the typical breakup fee. Sometimes rivals use a go-shop period to learn more about a company and have no intention of bidding. Most go-shop periods don’t result in a rival bid.

Margot Fooshee, a spokeswoman for J. Crew, and Meredith Boice, a spokeswoman for Urban Outfitters, couldn’t be reached for comment. Chris Brathwaite from Sears declined to comment.

Sears Holdings Corp., which operates about 3,900 stores under its namesake brand and the Kmart banner, has posted slumping sales for three consecutive years. Edward Lampert, Sears’s chairman and majority shareholder, faces escalating competition from Costco Wholesale Corp. and Wal-Mart Stores Inc. as U.S. consumers’ confidence wavers.

Growth Plans

Urban Outfitters has a wholesale apparel division and retail operations, whose lines include its namesake brand and the Anthropologie clothing chain. Urban may grow to as many as eight brands within 10 years by acquisition or developing its own, CEO Glen Senk said at an investor conference in November. The retailer has made one acquisition in its history, buying J. Franklin Styer Nurseries Inc. for $24.3 million in 2008 to expand into gardening products.

TPG, based in Fort Worth, Texas, previously owned J. Crew, and hired Drexler in 2003 to run the company. He has said he will stay as CEO if the buyout offer succeeds.

The offer for J. Crew was the largest of the 77 deals in the retail apparel industry last year, according to data compiled by Bloomberg. In the nine deals where data are available, bidders paid a median of 9 times earnings before interest, taxes, depreciation and amortization. TPG and Leonard Green’s offer implied a multiple of 8.1.

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editors responsible for this story: Robin Ajello at rajello@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net

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