Talbots to sell J. Jill; Williams mulls split; i2 shareholders approve JDA merger, board rejects new offer

By Cristal Cody

New York, Nov. 6 - The economy continued to weigh down earnings Thursday and prompted two companies to pursue sales and another to unsuccessfully make a lower offer after shareholders had accepted the first offer.

Talbots Inc. said Thursday that it plans to sell its J. Jill brand after buying the company just two years ago.

Williams Cos. Inc. is mulling ways to boost shareholder value, including a split of its gas exploration and production, gathering and processing and interstate transportation businesses.

Dallas-based i2 Technologies Inc. stockholders approved the merger with JDA Software Group Inc. on Thursday, but the board rejected a lower offer made after the meeting.

Meanwhile Thursday, stock indexes continued downwards a second day after elections.

The Dow Jones Industrial Average fell 443.48, or 4.85%, to 8,695.79 and broader indexes also dropped.

The Standard & Poor's 500 Index lost 47.89, or 5.03%, to 904.88, and the Nasdaq Composite Index gave up 72.94, or 4.34%, to 1,608.70.

Talbots to drop money-sucking Jill

Talbots paid a good deal for J. Jill so it could beat out Liz Claiborne's offer back in 2006.

The Hingham, Mass.-based retailer paid $518 million, or $24.05 a share, for J. Jill, up from the initial $366 million, or $18 a share, bid from Liz Claiborne.

Talbots said Thursday in its third quarter earnings report that it plans to focus on its core business.

"While we have made solid progress in improving the J. Jill brand's operation, we have made the strategic decision to pursue its sale," Trudy F. Sullivan, president and chief executive officer, said in a statement.

Talbots' shares fell 11.14% to close at $6.70 in trading, in response to lower sales for the 13 weeks ended Nov. 1 of $357 million, versus last year's sales of $414 million.

The company operates 271 stores under the J. Jill brand, according to a regulatory filing.

"The CEO has taken the position of body shopping, so they are clearly committed to making it go away," said Richard Jaffe, an analyst with Stifel Nicolaus & Co.

Talbots will reclassify J. Jill as a discontinued operation beginning in the third quarter, he said.

"J. Jill has underperformed and been an earnings and liquidity drag since its acquisition," Jaffe said. "With discontinuing J. Jill's operations, we believe that significant operating losses will be removed and anticipate that our earnings estimates will increase with the absence of J. Jill."

Williams explores business split

Tulsa, Okla.-based Williams said Thursday that management and the board of directors are evaluating changes to enhance shareholder value, including splitting off one or more of the company's principal units.

The company expects to announce a specific direction in the first quarter next year. Williams' businesses span natural gas exploration and production; gathering and processing; and interstate transportation.

Which businesses are they likely to consider?

"That's the $64,000 question," said Gordon Howald, an analyst with Calyon Securities USA Inc.

The macroeconomic environment, credit markets and energy prices are factors Williams said it will consider as part of the evaluation.

"While Williams' operating results and liquidity continue to be strong and we've created significant value for shareholders, including a 128% three-year return through 2007, the market is not recognizing the value of the company," Steve Malcolm, chairman, president and chief executive officer, said in a statement. "We believe we can do more to deliver value in the future."

Over the past few years, the company has divested its power business and completed a $1 billion stock repurchase program.

Shares fell 7.71% to close at $18.08 Thursday, less than half of its yearly high of $40.75.

Shareholders approve JDA merger

While stockholders of i2 Technologies approved the merger with JDA Software Group on Thursday, the board rejected a lower offer.

"Following the stockholder meeting, i2 received a written proposal from JDA to amend the common share consideration in the merger agreement significantly below $14.86 per share," i2 said in a statement. "The i2 board of directors has reviewed JDA's proposal and concluded that it is not in the best interest of i2's stockholders to pursue it."

Scottsdale, Ariz.-based JDA Software had asked the company on Wednesday to cancel the shareholders meeting so it could bargain for a lower price.

JDA said because of the adverse effect of the continuing credit crisis, available credit terms would result in unacceptable risks and costs to the combined company at the original offer of $346 million in cash.

More than 80% of i2 Technologies' outstanding shares were voted in favor of the merger, the company said.

The company's stock fell 13.63% to close Thursday at $9 a share. The stock traded at $14.16 on the last day of trading before the merger was announced Aug. 10.

JDA's stock fell 3.27% to close Thursday at $11.83, down from the $17.91 shares closed at before the merger announcement.

Hexion extends tender offer

In other news, Hexion Specialty Chemicals said in a statement that it has extended the expiration date for the cash tender offers for the outstanding senior Huntsman Corp. notes to Nov. 17 .

Huntsman executives did not discuss Hexion's pending $6.5 billion takeover of the company during a third quarter earnings conference call Thursday, other than to say they plan to pursue actions in court.

Hexion filed a lawsuit against Credit Suisse AG and Deutsche Bank AG last month to force the banks to honor their financing commitment letter.

Credit Suisse and Deutsche Bank refused to finance the acquisition over concerns about the solvency of a combination of the two companies.

Hexion received a Jan. 8 trial date in the New York Supreme Court to address whether requirements from the banks' commitment letter that to funded the acquisition were met within the agreement's timeframe.

Hexion, operated by private equity firm Apollo Management, also has tried to back out of the deal, but was ordered to continue with the merger by a Delaware court in September.

The deal was first reached in July 2007.

Hexion will discuss its third quarter results on Nov. 14.

Huntsman shares fell 2.24% to close at $8.30.

Mentioned in this article:

Huntsman Corp. NYSE: HUN

i2 Technologies Inc. Nasdaq: ITWO

JDA Software Group Inc. Nasdaq: JDAS

Talbots Inc. NYSE: TLB

Williams Cos. Inc. NYSE: WMB

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.