When one person wants you, they all do. And so Sears and Urban Outfitters might try to scoop up J.Crew, after the company announced plans to go private with a $2.8 billion sale to private equity firms TPG Group and Leonard Green & Partners LP. "Three people with knowledge of the matter" tell Bloomberg that Sears and Urban are "studying J.Crew's books," though neither would say if they plan to make a bid. The bids must be submitted by January 15, however, which is when J.Crew's official shopping-around period ends. One analyst says that Sears and Urban's idea doesn't make sense.
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.
Meanwhile, the number of lawsuits filed by shareholders who think J.Crew CEO Mickey Drexler's $16 million payout package under the terms of the current deal has risen to more than a dozen. It's also possible the interest from Urban Outfitters and Sears is just a way for them to get more information about J.Crew they wouldn't otherwise have the opportunity to get. Why not take the opportunity to go through someone else's stuff?