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J.Crew Shareholders Advised to Vote Against the $3 Billion Buyout

Some weekend wear from J.Crew. Look good while you look concerned, shareholders!

Institutional Shareholder Services is a prominent firm that advises on financial matters like big shareholder buyouts. They weighed in the other day on the one J.Crew is hoping for in its yet-to-be-approved $3 billion sale to private equity firm TPG Capital, suggesting that shareholders vote against the sale since it could easily screw them over. This is bad for J.Crew since the ISS is a highly regarded firm. It's chief criticisms:

1. The bid undervalues J.Crew.

2. If the deal falls through, J.Crew's stock could plummet.

3. It's shady that J.Crew CEO Mickey Drexler waited seven weeks after being approached about the buyout to inform the board.

The ISS report validates disgruntled shareholders, who have sued over the potential sale. Today, J.Crew made a presentation to defend itself against the ISS's conclusions. They attempted to sway opinions by:

1. Painting its TPG deal in a favorable light based on past buyouts of other companies.

2. Arguing that J.Crew's shareholders better approve the deal if they know what's good for them, since sales are slipping and company stock is underperforming as this whole mess drags on.

3. Flashy imagery of celebrities. The Wall Street Journal's eagle-eyed reporters who attended the presentation write:

(Frivolous side note: J. Crew’s PowerPoint was fronted by a catalog photo shoot turned investor glossy showing a carefree couple cruising in a convertible. With the help of pop-culture-savvy Deal Journal colleagues, we are able to ID the cover boy as Sam Page, an actor who has appeared in “Mad Men” and “Desperate Housewives.”)

The ISS is so kicking itself right now for not putting in that call to Lea Michele — and not knowing that special PowerPoint bookings were, like, a "thing."

I.S.S. Weighs In Against J.Crew Deal [DealBook/NYT]
J. Crew Defends Private Equity Buyout [Deal Journal/WSJ]

Photo: J.Crew

Copyright © 2013, New York Media LLC. All Rights Reserved. The Cut® are registered trademarks of New York Media LLC.

Copyright © 2013, New York Media LLC.
All Rights Reserved.

Copyright © 2013, New York Media LLC. All Rights Reserved.

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