This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

19 Retail Takeovers: Rumors Run Rampant

Stocks in this article: JAS

(Retail takeover article updated from Dec. 16)

NEW YORK ( TheStreet) -- Did you miss the boat on the Gymboree (GYMB), J.Crew (JCG) and now Jo-Ann Stores buyout? If so, there are still plenty of potential retail takeovers making headlines for investors to take advantage.

Jo-Ann Stores announced on Thursday that it is being acquired by private-equity firm Leonard Green in a deal valued at $1.6 billion, or $61 a share. This is a 34% premium over its closing price on Dec. 22.

This is the second retail acquisition by Leonard Green over the past two months, and the third major deal within the sector in the past three months.

Leonard Green, along with TPG, bought J.Crew in November for $2.86 billion, or $43.59 a share, a 16% premium from the stock's closing price on Nov. 22. As part of the deal, Millard Drexler will continue as chairman and chief executive officer and maintain a significant equity investment in J Crew.

This followed the acquisition of Gymboree by private equity group Bain Capital for $1.8 billion, or $65.40 a share. The deal represents a 57.4% premium over Gymboree's share price at the close on Sept. 30, and a 23.5% premium over the close on Oct. 8.

" This is a valuation equal to the most richly valued names in our universe, despite what we believe to be modest growth potential and operating margin expansion," Stifel Nicolaus analyst Richard Jaffe, wrote in a note. "Clearly, private equity investors value these companies more richly than stock market investors."

This level of private equity interest suggests that other companies may also be considered for a takeout, including Aeropostale (ARO), Chico's (CHS) and Children's Place (PLCE), Jaffe notes.

"The depressed valuations held by many publicly-traded apparel retailers, their very good cash flow characteristics, strong balance sheets and attractive earnings leverage, coupled with the low interest rate environment and a preponderance of highly liquid, private equity funds seeking investments creates a favorable environment for both buyers and sellers, in our view," Jaffe wrote.

Jaffe estimates the valuation in a leverage buyout or take-over scenario would be significantly higher than the current share price. But he does warn potential buyers that many retailers' balance sheets look deceptively clean due to store leases that are longer-term commitments and generally not shown as a liability. Though he does not think this should deter buyers.

Here are some retailers that could still be up for grabs...

1 of 20

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,072.03 +10.80 0.52%
NASDAQ 4,769.4260 +21.03 0.44%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs