Talbots Agrees to Acquire J. Jill Group
Wednesday, 08 February 2006
The Talbots, Inc., a national specialty retailer and cataloger of women’s, children’s and men’s classic apparel, shoes and accessories, and The J. Jill Group, Inc., a multichannel specialty retailer of women’s apparel, including accessories and footwear, yesterday announced that they have signed a definitive merger agreement whereby Talbots will acquire all outstanding shares of J. Jill for $24.05 per share, in cash, for total equity consideration of approximately $517 million, net of option proceeds.
Talbots will finance the transaction with amounts drawn under a new $400 million credit facility, as well as cash on hand. The transaction is expected to be accretive to Talbots earnings in fiscal 2007, including synergies.
Talbots ended fiscal 2005 with 1,083 stores and revenues of approximately $1.8 billion, while J. Jill finished the year with 200 stores and approximately $450 million of revenues. The combined company will be a leading multi-channel specialty retailer targeting the age 35+ market with 2005 pro forma annual revenues of approximately $2.3 billion, and 1,283 stores located in 47 states, the District of Columbia, Canada, and the U.K.
Arnold B. Zetcher, Talbots Chairman, President and CEO, commented, “This transaction brings together two great brands, which share a strong customer-first culture and serve distinct yet complementary segments of the age 35+ female population. J. Jill’s focus on apparel for a sophisticated casual lifestyle, with artistically inspired styles, provides a perfect counterpoint to Talbots offering of updated modern classics.”
“Working together, we expect to capture the significant growth potential of the J. Jill brand and enhance shareholder value. We believe our proven expertise in managing a complex multi-channel operation will enable us to maximize the cost synergies of our similar business models, particularly in back-office functions.”
Zetcher concluded, “Our intent is to maintain each brand’s distinct identity and superior customer experience. Our current plan is to continue to operate separately areas such as merchandising, stores, catalog, Web, marketing, visual and store design. At the same time, we believe we will benefit individually and collectively from the combined talent and expertise of our dedicated associates in both organizations. Finally, with this transaction, we are continuing to build a great portfolio of brands, which will accelerate our growth and strengthen our position as a leading apparel destination for this highly desirable customer demographic.”
Gordon Cooke, J. Jill’s Chairman, President and CEO commented, “J. Jill has evolved over the past 10 years from a multi-brand, catalog-only, market-sourced company to a successful multichannel, private-label, national retailer. We have opened 200 stores in the past six years while maintaining a significant presence in both catalog and the Internet. I am most proud of the fact that we have achieved this growth while creating and maintaining an internal corporate culture in which there is an upbeat, highly motivated and collaborative environment with associates who passionately believe in J. Jill at every level throughout this organization. We have an extremely talented management team that has been enthusiastic and unwavering in its contributions to the growth and success of our brand.”
“For all these reasons,” Cooke continued, “we are very pleased about our combination with Talbots. In addition to providing a premium to J. Jill shareholders, this transaction is an excellent strategic fit for us. Talbots is a highly successful organization and operates a business model almost identical to that of J. Jill. As their neighbor on the South Shore of Massachusetts, we have always admired and respected their company and accomplishments. Further, both of our organizations share a mutual respect for our associates and customers, and we believe that Talbots many strengths and competencies will complement the core strategic value of the J. Jill brand. We are excited about the future growth opportunities that will be created as a result of this combination.”
Cooke was the Direct Marketing Association’s Chairman of the Board of Directors in 2003.
J. Jill will continue to operate under its name and will retain its headquarters in Quincy, MA, which is located approximately seven miles from Talbots headquarters in Hingham, MA.
The Boards of Directors of each of Talbots and J. Jill have unanimously approved the transaction. The merger is expected to close in the second quarter of 2006 and is subject to approval by the stockholders of J. Jill, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.
Merrill Lynch & Co. acted as exclusive financial advisor to Talbots and Peter J. Solomon Company acted as exclusive financial advisor to J. Jill. Dewey Ballantine LLP and Pitney Hardin LLP acted as legal advisors to Talbots and Kirkland & Ellis LLP and Foley Hoag LLP acted as legal advisors to J. Jill.