PE firms nearing deal to buy J Crew Group for $3 bn

PE firms nearing deal to buy J Crew Group for $3 bn

New York: Two private equity (PE) firms — TPG Capital and Leonard Green & Partners — are nearing a deal to buy clothing retailer J Crew Group Inc for $3 billion, a media report has said.

Attributing to people familiar with the matter, The Wall Street Journal reported that a pair of PE firms are close to a deal to acquire clothing retailer J Crew Group Inc for $43.50 a share in cash, or about $3 billion.

Under the deal being considered, TPG Capital, a former owner of J Crew, would have a 75% stake in the company and Los Angeles firm Leonard Green & Partners would own a 25% stake, the report noted.

According to the publication, a deal could be announced as soon as today.

The PE firms plan to work with J Crew CEO Millard Drexler, who has a more than five per cent stake in the company according to the most recent regulatory filings, it added.

The report said that J Crew, TPG and Leonard Green declined to comment on the issue.

Drexler has thrived at Crew, positioning the New York-based chain as a seller of high-end casual gear and expanding into new areas such as bridal wear, the report pointed out.

He is heavily involved in the day-to-day operations, and his intense focus on product and avowed disdain for markdowns have helped Crew emerge from the recession stronger than many of its casual apparel counterparts, it added.

TPG was a previous owner of J Crew, buying an 88% stake for about $500 million in 1997. The company later went public in 2006 and became known for preppy clothing favored by US First Lady Michelle Obama.

In August, J Crew reported second quarter income of $34.9 million, compared to $18.6 million in the same period of 2009.

Revenues increased by 14% to $407.5 million from a year ago.