When we last visited J. Crew in November, the company had announced it would be acquired by TPG Capital and Leonard Green & Partners in a cash deal valued around $3 billion ($43.50 a share). At the time, 57 percent of respondents to a RetailWire poll said the deal would be good for J. Crew. Only 24 percent thought the deal was a mistake.
One of the key aspects of the deal from the point of view of analysts and industry experts was that Mickey Drexler, CEO of J. Crew, would stay on and continue working his merchandising magic for the company.
But almost as soon as the deal was announced, questions were raised about Mr. Drexler's dealing with the would-be buyers. Negotiations between Mr. Drexler and the equity firms went on for seven weeks before he notified J. Crew's board.
Now, a new Bloomberg News report suggests that the previous deal may not be done as two retailers, Sears Holdings and Urban Outfitters, and two unidentified private equity firms are looking at possibly submitting their own bids for J. Crew.
A bid by Sears was quickly dismissed by analysts.
Christine Chen, an analyst with Needham & Co., told Bloomberg, "J. Crew is positioned as aspirational and Sears is not. It would have a negative impact on the J. Crew brand."
Brian Sozzi, an analyst with Wall Street Strategies who follows Urban Outfitters, said in a research note that acquiring J. Crew would "give the eclectic retailer a higher income customer base (less college kid more 25-35 year old), more mall-based stores, and greater leverage over suppliers at a time of input inflation."
Mr. Sozzi did not think Urban Outfitters was likely to make the deal because it would leverage the company's balance sheet, J. Crew had a lower return on assets and did not provide any international exposure. He also said Urban Outfitters "has an affinity for developing its own brands."
Both TPG and Leonard Green stand to profit even if another bid is eventually accepted by the retailer. J. Crew would have to pay $27 million to the firms if their deal does not go through.