February 2, 2011
J Crew - but we had a deal!
J Crew has filed a letter with the court in response to the plaintiff's letter. You can download it here. Rather than subvert the MOU, defendants argue in their letter that they have fully complied with the terms of the MOU and that the plaintiffs are just trying to have their cake and eat it, too. The plaintiffs complained that J Crew's board was undermining the terms of the settlement by announcing that they had received no offers by the end of the initial go-shop period. So what, say the defendants (from their letter):
Plaintiffs claim that the January 18 press release undermined the go shop. But that makes no sense. Announcing the results of the initial go-shop would have no effect on the viability of the extended go-shop. If there were additional bidders during the initial go-shop, announcing that fact before extending the go-shop would simply have the effect of continuing an open, public auction, something that would benefit shareholders. And TPG would be forced to compete with any new bidder no matter whether the Company publicly announced it or not. If there were no additional bidders during the initial go-shop, announcing that fact could only encourage bidders who might be on the fence to bid during the extended go-shop because they would perceive less competition. In either event, TPG could not possibly be benefited by knowing whether there were or were not additional bidders during the initial go-shop. Plaintiffs do not provide any explanation as to how the announcement of the results of the go-shop would in any way affect the go-shop process.
Nor could they. The public disclosure of the results of the initial go-shop period simply will not have any meaningful effect on the extended go-shop. Potential new bidders do not care whether someone did or did not bid before (except the fact that there were no bidders means that there potentially is less competition for the Company.) Likewise, TPG cannot do anything with the information it learned from J. Crew’s public disclosure. If there is a new bid, it still will have to compete with that bid.
Looks like this whole thing is landing on Vice Chancellor Strine's lap.
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