Jan 18 - Clothing retailer J Crew Group Inc is set to settle a shareholder lawsuit over its proposed takeover by private equity firms TPG Capital and Leonard Green & Partners LP.

J Crew navy schoolboy blazer for girls

A $2.86 billion deal to acquire J Crew was announced on November 23, with TPG Group and Leonard Green & Partners LP agreeing to buy the company for $43.50 a share, a premium of about 15 percent.

Lawsuits have protested the proposed sale price and asserted that J Crew Chairman and Chief Executive Millard Drexler potentially breached his fiduciary duties to investors.

J Crew said that it and other defendants agreed to settle the putative class action lawsuit pending in Delaware chancery court. The agreement with the plaintiffs is subject to court approval.

J Crew received no rival takeover bids during its "go shop" period and will remain with its original $2.86 billion buyout offer from TPG Capital and Leonard Green & Partners LP, a source familiar with the situation told Reuters on Sunday.

The "go shop" period to solicit competing offers, which expired on January 15, was extended until February 15 as part of the agreement.

The pact also includes a $10 million payment to plaintiffs, payable if and when TPG Capital and Leonard Green buy J Crew.

The Federal Trade Commission granted early termination of the mandatory Hart-Scott-Rodino waiting period, J Crew added.

Shareholders of record as of January 21 will be able to vote on the merger at a meeting set to be held on March 1, J Crew said.

Shares of J Crew fell 0.9 percent to $43.43 in midday trading on the New York Stock Exchange.

Bloomberg previously reported that J Crew was close to settling the suit, citing two people with knowledge of the matter.

(Reporting by Sakthi Prasad in Bangalore and Jessica Wohl in Chicago; Editing by Mike Nesbit and Tim Dobbyn)