An investor advisory firm is the latest to cast judgement on J Crew's $3bn takeover by two private equity firms, recommending that shareholders reject the bid for undervaluing the fashion retailer.

A report issued by Institutional Shareholder Services Inc (ISS) also criticises the seven-week wait by J Crew chief executive Millard "Mickey" Drexler before telling the retailer's board about the buyout interest from private equity firms TPG Capital and Leonard Green & Partners.

But J Crew says the ISS report is "deeply flawed in its analysis and conclusions," and that the proposed transaction offers a full and fair price for the retailer's shareholders.

"We believe that ISS has reached the wrong recommendation with respect to the contemplated transaction with TPG and Leonard Green," explains Josh Weston, chairman of the special committee of the J Crew board of directors.

"The special committee ran a thorough process, including analysing the risks and rewards of all alternatives. This process resulted in a premium offer that provides immediate and certain value to J Crew shareholders."

The retailer, which operates 249 retail stores as well as a catalogue and online operation, is holding a shareholder meeting in New York on 1 March to vote on the takeover.

Earlier this month the deal suffered another blow when a group of J Crew shareholders said they would seek a settlement in the belief that they have lost out on a better deal because Drexler publicly stated his preference for private equity firm TPG Capital.