Holiday Shopping Turns to M&A, J. Crew Near Buyout Deal


The holiday shopping season will not just be for clothes and toys this year. Private equity firms are likely to buy retailer J. Crew Group (JCG) for $43.50 a share or about $2.8 billion, according to a number of media sources. The negotiations were first covered in the New York Times.

TPG Capital, which owned a piece of the retailer before, would take a 75% stake. Buyout firm Leonard Green & Partners would own 25%. The group will work with the company's CEO Michael Drexler to close a deal.

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Not surprisingly, one of the largest issues with the transaction is price. Shares traded at $37.65 at the close on Nov. 22. However, the stock was as high as $50.96 this last April. The $43.50 buyout would only be 15% above the current stock price. Investors might balk at such a modest premium.

J. Crew has consistently beat Wall Street estimates over the last four quarters. First Call analyst consensus ratings show the median call on the stock is a "buy."