Should Gap go private?

Posted Jan 30th 2007 5:16PM by Zac Bissonnette
Filed under: Internet, Gap Inc (GPS)

Yesterday, I wrote about Jim Cramer's prediction that The Gap, Inc. (NYSE:GPS) would be taken private in the not-so-distant future. Today, the Motley Fool continued the speculation with a series of "Dueling Fool" posts debating the future of the company.

One argument for taking the company private is that we are in the midst of "feeding frenzy" of leveraged buyouts and that a favorable private equity deal may not be favorable a few years down the road. Going private would remove the company from the scrutiny of public opinion and allow the company to take more drastic steps to improve.

If I were a shareholder of Gap, I would probably support the idea of a sale. The company has been under-performing for years and the turnaround efforts have not worked. A buyout could put Gap shareholders out of their misery at a nice premium to the current price.

Tags: dueling fools, DuelingFools, Gap buyout, GapBuyout, going private, GoingPrivate, motley fool, MotleyFool

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Reader Comments (Page 1 of 1)

2-01-2007 @ 9:24PM

Mark Wiepert said...

I dont think this is the time to go public yet. I see ANF really losing steam about 4 more points and for a well needed recession for GAP. Maybe it is the time to take the company private, Im not sure. I really think that it needs new Marketing. That to me seems to be a Huge and possibly the Biggest problem that faces them. With a cooling off period in ANF and Other Trendy clothing lines, I think now it the time to get a Position built in this company. The ANF cool down will help GAP and Gap's price will go up. Oh yeah, and a buy out at 24 insted of 19 adds ALOT of money.

2-02-2007 @ 9:41AM

Sean Hackbarth said...

It sounds trite but The Gap needs to find itself. With Target and even Wal-Mart getting more stylish, affordable clothes to the masses The Gap sits in a position where it thinks it's middle class but its prices say otherwise. At the least they have to completely re-think Old Navy to decide if they really want to compete with the discounters. Going private gives the company some breathing room and allows it to experiment some more. Also, who knows how long this private equity binge will last.