Apax Partners has inked a deal to acquire teen retailer Rue21 Inc. for $1.1 billion.
The all-cash transaction has a per-share value of $42, and represents a 23.1 percent premium over the $34.12 closing price of Rue21 shares on Wednesday. The Rue21 board members who did not recuse themselves have already approved the transaction. Two board members who are also Apax partners and Bob Fisch, chairman, president and chief executive officer of Rue21, were the three who recused themselves from the board vote.
As part of the purchase agreement, Rue21 will now be part of a 40-day “go-shop” process to see if there are better offers. Presuming no other bids, the Apax acquisition is expected to close before the end of the year.
Fisch and the Rue21 management team have not signed any employment agreement with the global private equity firm. The team has indicated they are “willing to work with any party that emerges through the go-shop process.”
John Megrue, ceo of Apax Partners U.S., said, “I have worked closely with Bob Fisch to support the company’s growth from less than 100 stores at the time of the initial investment in 1998 to over 900 stores today, and Apax is [pleased] to continue the journey with the company’s senior management team.”
Apax’s most recent acquisition in the fashion and retail space was Cole Haan in February for $570 million. Previous acquisitions include Tommy Hilfiger Corp. and Calvin Klein. Both have since been sold to PVH Corp.
Rue21, which targets young men and women between ages 11 and 17, went public through an initial public offering in November 2009.
Before that, Rue21’s parent, Pennsylvania Fashions Inc., filed for bankruptcy protection in February 2002. The company emerged in May 2003 under the name Rue21. Its majority shareholder at the time was buyout firm Saunders Karp & Megrue, which merged with private equity firm Apax Partners Worldwide in February 2005.
Rue21 is set to report on June 5 results for the first quarter ended April 30. The retailer on Thursday said preliminary diluted earnings per share are expected to be 44 cents, on a net sales gain of 9.1 percent for the period and a comparable-store sales decline of 4.6 percent.