We thought that the deal to take J.Crew private was more or less done, but there are four companies giving some thought to countering TPG‘s offer to buy the brand (and the entirety of its cool factor) for $3 billion. Two of those companies are private equity firms for whom such a deal might make sense. But the other two businesses in the running, Sears and Urban Outfitters, would make pretty strange bedfellows for J.Crew.
Bloomberg reports that both companies are looking through J.Crew’s books to see if making an offer is a good idea. If either company makes a bid, though, it’d have to be on paper before Jan. 15, the end of J.Crew’s go-shop period (any time a public company is sold, it’s allowed one or two months to entertain offers from other companies). The Cut astutely points out that Sears and Urban Outfitters might just be poking around J.Crew’s financial history because they can — and maybe they’re right. At least one financial analyst thinks buying J.Crew wouldn’t make sense for either company:
Sears buying the clothing chain “would be great for Sears, but horrible for J. Crew,” said Christine Chen, a San Francisco-based analyst for Needham & Co. “J. Crew is positioned as aspirational and Sears is not. It would have a negative impact on the J. Crew brand.”
A J. Crew-Urban Outfitters tie-up would make less sense because the two companies have overlapping customers and J. Crew’s sales are growing more slowly, said Chen, who recommends holding J. Crew shares and buying Urban Outfitters.
We’re guessing none of that is news to J.Crew — and while none of the companies would comment, we’d be willing to wager that J.Crew would rather go back to TPG. After all, the firm used to own J.Crew and even hired its current CEO Mickey Drexler. And if J.Crew accepts a higher offer, it would have to shell out $27 million in fees to TPG for putting the brakes on the original sale. And even for J.Crew, that’s not exactly chump change.