J.Crew's Time To Go Private Will Wait

"Thanks!" to many of you, including WellFedFred (in this post), who shared the following news.

Well, well, well. Just when you think the story about J.Crew's deal to go private has an end, another surprise pops up.

The following is an excerpt from New York Magazine's the Cut (click here for its entirety):

J.Crew Accuses Angry Shareholders of Being Greedy
By: Amy Odell
February 2, 2011

Shareholders unhappy with J.Crew's plan to go private, and the settlement they agreed to after suing the retailer, are trying to get more money from the chain. Having accused it of wrongly manipulating the settlement in their favor, they're now asking for "very significant monetary recovery" from J.Crew. J.Crew's lawyer has responded in a letter to the judge ruling on the case: "Having largely reaped the fruits of their bargain, plaintiffs now want to renege."

What happened to cause this? For a quick explanation (from here):

J.Crew reached a settlement with shareholders who sued the company after it announced plans to sell itself to a private equity firm for $3 billion. Under the settlement, J.Crew agreed to extend the go-shop period to February 15 to solicit rival bids that shareholders could vote on. However, a lawyer for the shareholders now argues that J.Crew manipulated the process by scheduling a vote on the bid for March 1 and announcing the results of the initial go-shop period, during which no other bidders emerged.

For more articles regarding this, check out:

• "Behind the Collapse of the J. Crew Settlement" [NY Times Dealbook]
• "J.Crew Threatens to Countersue Shareholders" [Women's Wear Daily]
• "J.Crew Shareholders Back Out of Settlement" [Thread NY]
• "J.Crew's Angry Shareholders Are No Longer Happy With Their Settlement" [New York Magazine]
• "J.Crew and the $3 Billion Deal Hangover" [Wall Street Journal]
  

It's interesting that J.Crew believes its shareholders are greedy. Are the shareholders the only ones? Some might argue that certain members of J.Crew and its buyer (in initial dealings) were acting greedy too.

J.Crew could have had a smooth transition to private by now if J.Crew and its Buyer (TPG Capital and Leonard Greene & Partners) were transparent from the very beginning (having the entire board aware of the deal to go private, fair evaluation of stock for shareholders, etc.). Because of those actions, the Buyer and J.Crew's reputations have been slightly damaged. And now there is talk that the Buyer & J.Crew will sue shareholders. Even if they win, there will be a significant loss.

I still have no doubt that J.Crew will be private, but its now a question of when and how much additional money it will cost them.

What are your thoughts on the deal? Are you surprised that this latest development is now occurring?