19 Retail Takeovers: Rumors Run Rampant

(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...