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J Crew deal faces uncertainty

Shares of casualwear brand J Crew remain above the offer price, prompting speculation that the prospective buyers private equity firms TPG Capital and Leonard Green & Partners may have to increase their current deal or another bidder could come forward, according to reports.

Shares of J Crew, which is listed on the New York Stock Exchange, were up from $43.50 (£33.28) to $43.72 (£33.44) yesterday.

The private equity firms acquired J Crew for $3bn (£1.9bn) last month. Under the terms of the agreement, J.Crew shareholders will receive $43.50 (£27.50) per share in cash, up 29% on J Crew’s average closing share price last month.

J Crew is obliged to consider other offers until January 15.

Reports suggested that even if the deal goes through as it is, it is likely to undergo intense legal scrutiny. It is understood about 12 law firms have said they intend to investigate the deal.

Law firm Joseph Klein said on Tuesday it was investigating J Crew’s board to determine if it breached its fiduciary duty in agreeing to the deal, either by signing the deal on too low a price or by not shopping it adequately, according to WWD.

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