So far,the board of locally based J. Jill responded by asking its shareholders to take no action until it reviews the offer.

This is not the first time New York City-based Liz Claiborne has made such a bid. In March, the company offered $17 per share and was "flatly rejected," according to a letter to J. Jill's board from Paul R. Charron, chairman and chief executive officer of Liz Claiborne. "Beyond providing J. Jill shareholders immediate liquidity at a significant premium, this strategic combination would enable us to rejuvenate J. Jill's well-regarded but underperforming brand," says Charron's letter.

Elizabeth Montgomery, an SG Cowen analyst agreed that an acquisition by Liz Claiborne could help turn around J. Jill. "With a focus on anarrower customer base and greater leverage in design and manufacturing, we think improvements in profitability could be achieved," she wrote in a research report note.

While J. Jill's year-over-year 4.7% same-store sales gain in its most recent quarter outperformed many of its peers, the retailer, which targets women over 35 years old, has had profitability problems. During its Q3, which ended Sept. 24, it lost $4.9 million, dropping it to a nine-month income shortfall of $1.5 million.

Lanigan says that J. Jill has suffered financially because executives "underestimated" the costs of its rapid store expansion, as it has made the transition from a direct-line merchant. J. Jill launched its retail stores in 1999.

Liz Claiborne's target price is more than 40% above J. Jill's $12.79-per-share closing price since the bid was made public. Trading of J. Jill shares topped $18 after the release of the offer.

Lanigan predicts the offer could eventually rise above the $18-per-share price, she says, adding, "I would suspect J. Jill management wants to keep this as their product and turn it around themselves."

Lanigan also points out that one unique aspect of the deal is that Liz Claiborne is targeting a straight retailer. In the past, the firm has acquired apparel brands such as Juicy Couture and Lucky Brand Jeans and launched its own ambitious retail roll out.