J.Crew's take over hoards all looks

Tuesday, 30 November 2010

The US retailer has just made public its acceptance of the take over bid from equity firms TPG Capital and Leonard Green & Partners for a total of USD3bn (EUR2.24bn), or USD43.50 per share. Big news for the apparel quoted market all over the world, as this operation becomes the biggest one in the industry for a long time.

Mirroring the expectation that this movement has originated, rest of values gathered within the FashionUnited Top 100 showed cautious, what led the index slowly down for the whole stoking session, closing at 1,239.57 and compared to Monday's 1,248.86 .

Coming back to J. Crew, the American fashion retailer said it has agreed to be taken over by private equity firms and fore said that, under the terms of the agreement, holders of the outstanding common shares of J.Crew will receive $43.50 per share in cash, or a total of approximately $2.86 billion. The price represents a premium of 16% to J.Crew’s Tuesday closing price before the announcement and 29% premium to last month’s average price.

Last week J. Crew announced its 3Q10 earnings reporting that its store sales increased by 1% and direct-to-consumer sales increased 12% vs. 3Q09. During the recent economic downturn when many of its peers were badly hit, J. Crew was able to grow revenues by focusing on basic styles rather than fashion-forward items leading to market share gains. This strategy is continuing to pay off.

Another company in the spotlight this week is Quicksilver, specially after a well known analyst raised its price target on Monday as the outdoor and sports lifestyle company indicated its fourth-quarter revenue would likely beat Wall Street's expectations. Quicksilver anticipates quarterly revenue between $492 million and $497 million. Analysts surveyed by Thomson Reuters predict revenue of $462.8 million. "Sales trends remain negative but are getting 'less bad' with the quarter coming in above original expectations," Taposh Bari of Jefferies & Co. wrote in a client note.

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