There's not much to write home about for Talbots' shareholders. Golden Gate Capital is paying $75 million for a business for which Talbots originally paid $517 million in 2006, which at the time sounded rich. (Urban Outfitters'
Unless something has changed in the meantime, the proceeds of the J. Jill sale will go to Talbots' majority stakeholder, Aeon, which has been helping Talbots out of its troubles by extending more and more credit. In an 8-K filing with the Securities and Exchange Commission in February related to an Aeon loan, Talbots disclosed that all proceeds of J. Jill would be handed to Aeon.
Therefore, the sale is a wash for Talbots, although Talbots' shareholders can at least look forward to the idea that management will no longer be distracted by J. Jill's troubles. As I said in November, though, the main takeaway might be thanks for nothing, J. Jill.
As much as investors tend to get excited about mergers and acquisitions, many times these don't go as well as invariably optimistic managements predict. There are plenty of examples. Whole Foods Market's
Way back in 2005, when J. Jill was still a stand-alone company, I considered it a rotten trick, not a treat. Talbots thought otherwise and paid -- and overpaid -- the price. Given the rotten economy and Talbots' long-standing issues turning around its business, I hope its investors don't forget that this retailer still has its work cut out, regardless of this new development.
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