NEW YORK CITY-Apparel retailer J.Crew Group Inc., headquarteredhere, said Tuesday it has agreed to a buyout by a partnership ofSan Francisco-based TPG Capital and Leonard Green & Co., basedin Los Angeles. The deal is valued at approximately $3 billion, or$43.50 per share, a 29% premium on the retailer’s average closingshare price last month. Millard Drexler will continue as J.Crew’schairman and CEO and maintain a "significant equity investment,"the company says.

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Under terms of the agreement, a committee of J.Crew directorscan shop around for alternative proposals through January 2011, a“go shop” period that would reflect the retailer’s holiday salesperformance. If the process does not result in a better offer, theTPG/Leonard Green deal is expected to close in the first half ofnext year.

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“As I have always said, we are in this for the long term and wedo what we do day in and day out so we can deliver the bestpossible products to our customers,” Drexler says in a statement.“TPG Capital, with whom we have a long working relationship, alongwith Leonard Green & Partners, are both well respected privateinvestment firms whose substantial resources and experience willenable us to invest in our future growth.”

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TPG had taken a 56% stake in J.Crew for $125 million in 1997,and hired Drexler as CEO soon after he stepped down from the topspot at Gap Inc. in 2002. The private equity firm sold off the lastof its J.Crew shares in April 2009. TPG and Leonard Green alsojointly own pet products retailer Petco.

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The board’s special committee was advised by an independentfinancial advisor, Perella Weinberg Partners LP, and an independentlegal advisor, Cravath, Swaine & Moore LLP. Cleary GottliebSteen & Hamilton LLP is acting as legal advisor to J.Crew.Goldman Sachs and Bank of America Merrill Lynch are acting asfinancial advisors to TPG Capital and Leonard Green & Partners,while Ropes & Gray LLP is acting as legal advisor to TPGCapital and Latham & Watkins is acting as legal advisor toLeonard Green & Partners.

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Separately, J.Crew announced its third-quarter results onTuesday, with revenues increasing 4% year over year to $429.3million. Store sales for the quarter that ended Oct. 30 increased1% to $303.3 million, with comparable store sales decreasing 1%.That compares with an 8% same-store increase in Q3 ’09. Net incomefor the quarter was $37.8 million, a decline of nearly 14% yearover year.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.