Talbots to acquire J. Jill Group

BOSTON — Talbots Inc. said Monday it has agreed to acquire women's apparel retailer J. Jill Group Inc. for about $517 million, trumping an earlier unsolicited offer from Liz Claiborne Inc., which said it's not inclined to sweeten its bid.

Monday's deal would give Talbots, which has stores in Provo and Murray, ownership of a struggling brand catering to affluent older women that has recently seen its retail store expansion cannibalize its more profitable and established catalog operations.

J. Jill shares soared $4.37, or 23 percent, to close at $23.57 Monday on the Nasdaq Stock Market. Talbots shares fell 93 cents, or 3.4 percent, to close at $26.34 on the New York Stock Exchange.

Talbots' all-cash offer of $24.05 a share represents a 25 percent premium over Friday's closing price of J. Jill.

J. Jill, which has a Salt Lake store, started out in 1987 selling exclusively through catalogs but has opened 200 stores nationwide over the past six years, mostly in malls. It targets a much-sought-after and growing demographic: wealthy women age 35 and older.

Retail business now accounts for more than 60 percent of company sales. J. Jill has acknowledged the shift has hurt its more profitable catalogs, contributing to a $1.53 million loss in the first nine months of last year that followed a $6.1 million profit in the same period a year earlier.

Talbots executives say their 59-year-old company has experience balancing catalog, online and retail operations for its own brand that will help solve the dilemma at J. Jill, which will be maintained as a separate brand. While Talbots also markets men's and children's clothing, its traditionally styled fashions are designed to appeal to women 35 and older.

"We see no reason why we cannot restore J. Jill Group to operating profitability," Edward Larsen, Talbots' senior vice president and chief financial officer, told analysts in a conference call.

Talbots' $24.05-per-share offer tops the unsolicited $18-per-share bid Liz Claiborne made for J. Jill in November. Liz Claiborne later entered into a confidentiality agreement with J. Jill allowing it to examine its financial information.

In a statement Monday, Liz Claiborne's chairman and chief executive, Paul R. Charron, said, "We are disappointed that we were unable to acquire J. Jill at a price that makes sense for our shareholders. However, we are financially disciplined and will not overpay."

Liz Claiborne shares fell 5 cents to close at $34.27 Monday on the NYSE.