UK-based private equity firm Apax Partners Holdings Ltd has agreed to buy US apparel retailer Rue21 Inc (NASDAQ:RUE) in an all-cash deal worth some USD1.1bn (EUR851m), the companies said.
Under the definitive agreement, which allows for a 40-day go shop period for Rue21, Apax will pay USD42.00 in cash per share for the apparel retailer, a premium of 23% to its closing on 22 May, it said, adding it had secured debt financing to cover the price.
As SKM II funds, owners of a combined stake of some 30% in Rue21, are associated with the buyer, the go-shop period will be conducted by a special committee of Rue21 directors.
The SKM II funds pledged to vote in favour of the deal with Apax unless a superior transaction is agreed. Apax needs the votes of Rue21 shareholders controlling a majority of the shares not owned by the SKM II funds.
Commenting on the deal, Rue21′s chairman, president and CEO Bob Fisch said it would allow his company to achieve its long-term goals, such as expanding to more than 1,700 stores in the US and implementing new initiatives, including e-commerce. The company runs now 932 stores in 47 US states.
Completion is expected before the end of 2013, pending Rue21 shareholders approval among other conditions.
Perella Weinberg Partners, Kirkland & Ellis LLP and Potter Anderson & Corroon LLP are advising Rue21′s special committee. JPMorgan Securities LLC, BofA Merrill Lynch, Goldman Sachs Group Inc (NYSE:GS), Simpson Thacher & Bartlett LLP and Richards, Layton and Finger PA are providing advice to Apax. The SKM funds are using the advisory services of Ropes & Gray LLP.