NEW YORK — Premium denim manufacturer Blue Holdings has reached an agreement to acquire Long Rap Inc., owner of the Up Against the Wall specialty retail chain, in a deal worth $32 million in cash and stock.

Blue Holdings will pay Long Rap shareholders $16 million in cash and another $16 million in common stock, according to the terms of the agreement. The deal is expected to close in August or September.

Expanding the direct retail operations of Commerce, Calif.-based Blue Holdings has been a priority for chief executive officer and president Paul Guez.

“This strategic acquisition of Long Rap brings our retail vision into reality and saves us both the time and money to build everything from scratch,” Guez said in a statement.

During a March conference call with analysts to discuss year-end results, Guez expressed his intent to boost the company’s portfolio of brands and develop retail concepts in which to showcase them.

“My goal is to have six to 10 brands, and between 100 and 200 retail stores where I’ll have my brands and others,” Guez said at the time, adding that some of those stores would appear this year.

Guez said in an interview on Monday that he was counting on the merger to spur sales of the Blue Holdings brands and allow for more rapid growth of the Up Against the Wall chain.

“It’s very important to have a team of retailers that have a lot of experience, and they have been in the business for 30 years,” Guez said.

Up Against the Wall carries only two Blue Holdings brands, Antik Denim and Taverniti So Jeans, Guez said. A third, Yanuk, will be added soon. The chain also carries rival brands, including True Religion, Citizens of Humanity, Paige Premium Denim and Joe’s Jeans. Guez said he has no intention of getting rid of any competitors in the stores, but is, naturally, planning on devoting more space to the Blue Holdings brands. As to whether competing brands might cease selling in Up Against the Wall stores, Guez said: “I hope they don’t.”

Guez expects the deal to begin making positive contributions to earnings results next year.

This story first appeared in the June 20, 2006 issue of WWD. Subscribe Today.

Antik, Taverniti So and Yanuk fueled sales of $36.4 million last year, with Antik accounting for 70 percent of sales. Management expects to generate sales of $60 million to $70 million this year. For the most recent quarter ended March 31, sales rose 137.1 percent to $11.9 million. Earnings jumped 45.9 percent to $680,176, or 3 cents a diluted share, from $466,049, or 2 cents a share.

Up Against the Wall has 24 stores, the majority of which are located in the Washington metropolitan area, Virginia and Virginia Beach. The company also has a store in Miami and six on the West Coast. Three additional stores are to open next year, including a Las Vegas location.

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