IPO for J.Crew seems favourable, after talks with Fast Retailing dissolve

A potential IPO for fashion retailer J.Crew seems to edge closer,

as initial talks with Japanese holding company Fast Retailing Co, Ltd to acquire a stake in the fashion retailer have come to an abrupt halt.

Previous media outlets reported earlier this month that parent company of Japan's largest fashion retailer Uniqlo, was in discussion with J.Crew Group Inc to obtain a stake in the company. Sources indicated that J.Crew could potentially fetch a valuation of as much as 5 billion dollars, which is nearly two times the amount which its owners TPG Capital and Leonard Green & Partners LP paid for its buyout three years ago.

Fast Retailing seems to have been discouraged by the amount of speculation circulating in the press and ended merger discussions on Tuesday, according to the Wall Street Journal. Now that is seems that merger negotiations have come to an end, a potential return to the public stock market appears to be back on cards for J.Crew.

The US fashion fashion retailer is said to be working with Goldmans Sachs Group to explore options for an IPO. According to WWD, because J.Crew has filed its financial results with the Securities and Exchange commission, due to its publicly held debt, the paperwork needed for an IPO could be put together very smoothly.

Some sources indicate that J.Crew may have leaked news of its discussions with Fast Retailing purposely, in the hopes spurring the Japanese holding company into an agreement. Other sources believe that if J.Crew would file the needed paperwork for an IPO, it would encourage Fast Retailing, or other potential bidders to make an offer.

J.Crew previously launched an IPO in 2006, and was said to be one of the strongest initial public offerings of the year. However, the company was heavily in debt at the time and was using the majority of the proceeds for the stock offering to pay down half of its debt as growth and revenues slowed, before TPG and Leonard Green acquired the company in 2010 and turned it private.