J Crew bids $2.86 billion to be acquired (Figure)

Due to a sharp drop in sales, the J Crew Group (JCG.N) agreed to be acquired for $ 2.86 billion, but Wall Street financial sources expect the US clothing retailer will likely attract more investors to sell better prices.

According to previous proposals, TPG Group and Leonard Green&Partners LP will acquire company shares at a price of 43.50 per share, which is 15% higher than J Crew's previously announced stock price.

The company's original CEO and CEO Millard Drexler will continue to retain his original position, grasping the overall situation of J Crew. Millard Drexler had previously held a position at GAP. Since joining J Crew in 2003, he has brought the brand to a new perspective. He positioned J Crew as a brand between Gap and Ralph Lauren, and the brand's popularity has been greatly improved. At the same time, Millard Drexler himself is one of the major shareholders of the brand, worth 128 million US dollars.

During the time of Millard Drexler's administration, J Crew got a rapid development with a total of 244 retail outlets, 27 Outlet stores, and mail order and online shopping businesses.

TPG bought J Crew shares for the first time in 1997 when it bought 88% of the brand. After J Crew was listed in 2006, TPG sold its shares. So this is TPG's second purchase of J Crew shares.

But for professionals, the two sides are still in the stage of negotiating prices, and there may be changes in the future. They believe that there will be Other private capital investment J Crew, which may rise to more than $ 46 per share. However, neither J.Crew, TPG nor Leonard Green commented on the matter.

J Crew's growth has been slow this year and the revenue has fallen sharply. On October 30, the stock price has fallen to $ 37.8 per share, a 13.8% drop from the same period last year. In the third quarter, the brand suffered a loss of US$1 million, and accumulated brand losses for the entire year totaled US$10 million. Although it was better than the brand’s own estimate of US$13 million, the situation was still not optimistic. The lack of personality and the lack of new design of the brand are the main reasons for the decline of the brand.

Let's review the key points in the development of J Crew:

1947: Mitchell Cinader and Saul charles created J.Crew based on the popular Popular Club Plan;

1983: J.Crew launched mail order business under the leadership of Mitchell Cinader's son Arthur Cinader and daughter Emily Cinader Woods;

1989: J Crew's first store opened in South Street Seaport, New York;

1990: Brand sales reached 400 million U.S. dollars;

1992: Brand mail order business expanded in Japan, Europe and Canada;

In 1997: TPG and Texas Pacific Group acquired J Crew majority shares;

1998: Popular Club Plan was acquired by Fingerhut Cos;

In 2000: J.Crew's low-price series Clifford & Wills was acquired by Spiegel;

2002: Ken Pilot transferred from GAP to J Crew and was named CEO of the brand;

2003: Millard Drexler, former president of GAP, was appointed chairman and chief executive officer of J Crew and obtained shares in the company;

In 2006: The company was listed on the IPO with a price of 3.76 US dollars. In the same year, the Madewell subsidiary was established. Emily Woods was downgraded to the position of director, which also represented the reduction of the Cinader family's governance of the company;

2009: TPG sold the final 28 million J.Crew stocks. The company’s profit was US$123.4 million, and its sales increased by 11.3% to US$1.54 billion;

2010: TPG and Leonard Green subsidiaries acquire J Crew for $3 billion.