NEW YORK — J. Crew Group Inc., which is battling shareholders unhappy with its $3 billion deal to be taken private, reiterated that it would stand by the now-disputed settlement the two parties reached last month and said it plans to file a motion to dismiss the case.
The retailer, in a letter Tuesday to Delaware Chancery Court Vice Chancellor Leo Strine Jr., said it had fulfilled its side of the bargain. “If plaintiffs continue to refuse to negotiate in good faith over the specific wording of a release, defendants will assert counterclaims and third-party claims for breach of contract against plaintiffs and the class, among others,” the document said.
The letter was sent by Gregory Williams, an attorney at Richards, Layton & Finger.
In November, J. Crew inked a deal to be acquired by TPG Capital and Leonard Green & Partners, which allowed the company to consider other offers through Jan. 15. But shareholders sued and at the last minute hammered out a settlement to extend the company’s “go-shop” period, giving rival bidders another month to make a better offer. The deal envisioned a $10 million payment to plaintiffs.
Shareholders on Monday said they were no longer supporting the settlement because the company revealed the results of the initial go-shop period, which produced no other bids, and because it set a date of March 1 for shareholders to vote on the deal.
“Defendants’ actions also turned the extended go-shop period into a charade, since the special committee [of J. Crew’s board] sent the signal to the world that they are investing all resources in closing the deal with TPG as soon as possible, and that nobody else should bother to bid for J. Crew,” said Stuart Grant, an attorney representing shareholders, in his letter to the judge Monday.
The shareholders “intend to focus all efforts toward obtaining a very significant monetary recovery after a trial in this matter,” Grant said.
J. Crew fired back in its letter: “Having largely reaped the fruits of their bargain, plaintiffs now want to renege.”
Shares of J. Crew added 4 cents, or 0.1 percent, Wednesday to close at $43.47 as the S&P Retail Index lost 6.37 points, or 1.3 percent, to close at 495.59. Although the retail index surrendered the 500 mark achieved on Tuesday, the Dow Jones Industrial Average remained above 12,000 from the opening bell to the closing, ending the trading day at 12,041.97, a less than 0.1 percent advance. AnnTaylor Stores Corp. shares were off 74 cents, or 3.3 percent, to $21.80 after the company lifted fourth-quarter sales and earnings guidance but indicated gross margins at its Loft division hurt results.