Private Equity Cos. Buy Out J. Crew

Private equity firms Leonard Green & Partners (which is behind Petco, Whole Foods, and Sports Authority, among many others) and TPG Capital (Nieman Marcus, Sabre Group, Midwest Air) have bought out J. Crew for $3 billion. From the Wall St. Journal:

The deal puts the New York company in the hands of private-equity firms TPG Capital and Leonard Green & Partners for $43.50 per share. J. Crew Chief Executive Millard “Mickey” Drexler, a well-known merchant credited with the success of Gap Inc. a decade ago and the more recent turnaround at J. Crew, worked with both firms on the deal. Mr. Drexler will remain with the company.

Mr. Drexler’s participation added a layer of controversy. The chief executive was negotiating a potential sale for nearly seven weeks before he informed the board of his talks, J. Crew said in a securities filing. The company says the deal offers shareholders a full and fair price.

J. Crew became the darling of Wall Street in the recession as penny-pinching shoppers continued to snap up its embellished cardigans, skinny jeans and cargo pants. The brand has several high-profile fans, including First Lady Michelle Obama.

In a convoluted story, CEO Drexler had to be sued by shareholders for this deal to move ahead. The New York Times has more about the “no-shop” drama behind the J. Crew deal.

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