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J. Crew Extends Deadline for Rival Bids

Competing offers will be taken until Feb. 15.

J. Crew Group Inc. — which has a $3 billion takeover offer from TPG Capital and Leonard Green & Partners — on Tuesday agreed to accept rival bids until Feb. 15 to settle a shareholder lawsuit.

This story first appeared in the January 19, 2011 issue of WWD.  Subscribe Today.

The retailer’s November deal with TPG and Leonard Green initially allowed it to consider alternative proposals until this past Saturday.

“Despite an active and extensive solicitation of potentially interested parties in connection with the ‘go-shop’ period since the announcement of the merger agreement, the company has not received any alternative acquisition proposals to date,” the retailer said. Sears Holdings Corp., Urban Outfitters Inc. and two private equity firms were reported to be considering offers, or at least taking the chance to look at the retailer’s books as part of their “due diligence.”

J. Crew has a memorandum of understanding to settle a shareholder lawsuit pending in Delaware Chancery Court. As part of that deal, the merger agreement was amended, extending the “go-shop” provision by one month and reducing the termination fee to $20 million from $27 million. The deal also “contemplates” a $10 million payout to plaintiffs.

Shareholders of record as of this Friday will have the right to vote at a special meeting on the planned merger scheduled for March 1.

Millard “Mickey” Drexler, chairman and chief executive officer of J. Crew, has been criticized for talking to the private equity firms about a buyout almost seven weeks before presenting it to his board. The parties announced an agreement on Nov. 23.

Shares of J. Crew slipped 0.9 percent to $43.43 Tuesday — just below the proposed buyout price of $43.50 a share. Their highest close since the deal was made was $44.22 on Jan. 7.

The S&P Retail Index inched up 0.19 points to 507.50. The Dow Jones Industrial Average increased 0.4 percent, or 50.55 points, to 11,837.93, after setting a new 52-week high of 11,858.78 in midday trading.