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.

US private equity major KKR & Co LP (NYSE:KKR) is mulling over investing in retail store operator Saks Inc (NYSE:SKS) and possibly combining it with local peer Neiman Marcus Group Inc, Bloomberg reported today, citing people in the know.

One of the sources told the news agency that it was not sure whether the plan would result in a deal.

Knowledgeable people said earlier this month that Saks and Neiman Marcus had appointed Goldman Sachs Group Inc (NYSE:GS) and Credit Suisse Group AG (VTX:CSGN) respectively to study strategic alternatives, including their sale, Bloomberg said. According to one of the sources, the targeted price for Neiman Marcus could be around USD8bn (EUR6.2bn).

A possible tie-up would form the second largest retail store chain in the US with annual revenues of over USD7bn, after Nordstrom Inc (NYSE:JWN). It will also help the two companies trim costs by closing down duplicate stores located in the same shopping centres, one of the sources said.

Michael Appel, founder of retail consulting firm Appel Associates LLC, told Bloomberg that a possible merger would lead to many operating advantages. On the other hand, it could be impeded by complications related to landlord leases and difficulties arising from the differentiation of brands, Steven Dennis, founder of Dallas-based SageBerry Consulting LLC, said, as cited by the agency.

UK retail sales fell in April, with higher prices and poor weather blamed for keeping shoppers away.

The Office for National Statistics (ONS) said today that retail sales volumes were down 1.3% compared with March and the amount spent in the retail sector also decreased by 1.3%. Sales of food fell by 4.1%, the biggest monthly decline since May 2011.

Compared against April 2012, retail sales volumes last month were 0.5% higher but this was less than expected. The amount spent increased by 1.3%.

As with the monthly comparison, the greatest source of downward pressure came from the food sector, where the quantity of goods bought decreased by 3.8% and the amount spent was 0.2% lower year-on-year.

Consumers continued to turn to the Internet, with the average weekly spending online in April 2013 amounting to GBP571.7m which is an increase of 13.2% compared with April 2012. According to the ONS the amount spent online accounted for 10.0% of all retail spending excluding automotive fuel.

The British Retail Consortium (BRC) took an optimistic view of the April retail sales figures, saying that they are better than they look.

“April this year didn’t benefit from an Easter boost as in 2012, so sales look weak by comparison, especially for food which had its worst ever performance. The ONS figures actually suggest that April was broadly in line with March, if you take out the distorting effect of Easter timings,” commented Helen Dickinson, BRC director general.

Dickinson also highlighted the fact that the changeable weather this April meant that it was a mixed month for retailers. As temperatures rose towards the end of the month, demand for new-season clothing and footwear lifted following a slow sales due to the prolonged wintry weather.

The British Chambers of Commerce found little to cheer about in the ONS figures. Its chief economist, David Kern, said that the fall in retail sales volumes is disappointing and indicates that UK economic growth in the second quarter will be lower than the 0.5% growth envisaged in last week’s Bank of England Inflation Report.

UK supermarket chain Morrisons (LSE:MRW) will offer online grocery shopping by January 2014, the company confirmed today.

A long term agreement has been signed by Morrisons and online-only food retailer Ocado (LSE:OCDO) which combines affordable fresh food from Morrisons with Ocado’s end-to-end technology, logistics and distribution operations.

According to Morrisons this arrangement will enable the retailer to enter the online grocery market quickly with a profitable business model.

Ocado already has a partnership with Waitrose and the company claimed today that existing customers and its contractual agreement with Waitrose will remain unaffected by the new agreement with Morrisons. It is not yet clear how Waitrose will respond to the news about the Morrisons deal, but its managing director Mark Price was quoted by the Independent as saying that the company would be “looking very hard and carefully at the contract and the operational arrangements.”

The agreement announced today takes the form of a technology and services arrangement and a sale and leaseback of Ocado’s distribution centre in Dordon, Warwickshire.

Morrisons will make an initial payment of up to GBP170m to Ocado to acquire the Dordon facility and will invest a further GBP46m to expand it and establish a delivery network. As a result of this expansion, the distribution centre is projected to have a total capacity of 180,000 to 190,000 orders per week, of which 50% will be available for use by Morrisons.

The supermarket will also pay annual service costs and a contribution to R&D expenditure, while Ocado will receive a share of the positive EBIT of Morrisons.com.

Dalton Philips, chief executive of Morrisons, told the BBC that the company expects a return on its investment within three or four years.

Morrisons first announced in March that it was in talks with Ocado and Philips admitted then that it was a “late entrant” to the online food market.

German retailing major REWE Group announced plans to offload its consumer electronics stores, which operate as part of the ProMarkt chain.

REWE chairman Frank Wiemer said that the move was prompted by constantly growing competition in the local market, further exacerbated by the steady consumer shift to online shopping. REWE does not see any prospects for medium-term profitability at ProMarkt.

The chain’s share of the German market stands at a mere 1.4%, which excludes restructuring as an alternative, Wiemer added.

When approached by Reuters for additional information, a REWE spokesman declined to say whether any parties had expressed interest in ProMarkt. He only disclosed that the company was open to selling the stores as a bundle or individually.

UK retail sales in April were affected by the earlier Easter this year, the British Retail Consortium (BRC) confirmed today.

A new report from the BRC shows that retail sales values in April 2013 were down 2.2% on a like-for-like basis from April 2012 and fell by 0.6% on a total basis, with growth negatively impacted by the fact that Easter fell in April last year but in March this year.

Online sales continued to increase, rising by 8.3% compared to April 2012.

BRC director general Helen Dickinson commented that, excluding the Easter distortion, April was actually a better month than March, especially for non-food sales. The weather had a big influence on buying habits, with the prolonged cold meaning that shoppers had little interest in new season clothing and footwear ranges early in the month but that changed when the weather warmed up.

Consumers’ willingness to spend remains volatile. “A convincing trend towards revival is hard to spot and competitive pricing is still critical to generating sales, despite the effect on margins and on retailers’ ability to invest in offering customers new ways to shop,” Dickinson added.

David McCorquodale, head of retail at consultancy firm KPMG, highlighted the fact that the three-month weighted average, which smooths out the effect of the timing of Easter, shows a total increase in retail sales of 2.6%. This indicates that the health of the retail sector is holding up and may be on a positive trajectory, although it is yet to be seen at what margins these sales are being achieved and what is the cost of fulfilling the online demand, he said.

Taking into account Shop Price Index inflation, total retail sales were down 1.0% in real terms in April while the three-month average shows growth of 1.6%.

Another insight into the state of the UK retail sector came this morning with the release of a trading update from shopping centres operator Intu Properties. The company, which owns or part-owns 15 shopping centres across the country, including Lakeside and Manchester’s Trafford Centre, said that the retail environment remains “difficult” and retailers continue to be cautious about entering into store commitments.

In the first quarter of 2013 footfall in Intu’s shopping centres was down 1% compared to a year earlier, although the company noted that this still represents a significant out-performance of Experian’s measure of UK national retail footfall, which declined by 4% as a result of the weak economic background.

Although shop failures, lease expiries and tenant caution over new store commitments are likely to continue to affect short term earnings, Intu said that it is maximising the opportunities available in the changing marketplace, for example by introducing free high-speed Wi-Fi, a new mobile website and click and collect services.

French luxury goods group PPR SA (EPA:PP), which owns a  83% stake in of Puma SE (ETR:PUM), is not looking to increase its interest in the German sporting equipment company at present, PPR’s managing director Jean-Francois Palus said.

Speaking at Puma’s annual shareholder meeting, Palus, also the chairman of the sportswear company, said PPR will focus for the moment on supporting Puma’s transformation aimed at allowing it to take advantage of its potential.

Puma makes and sells sports and sport lifestyle footwear, apparel and accessories under the Puma, Tretorn and Cobra Golf brands.

PPR plans to change its name to Kering as of June, subject to shareholders approval at their annual meeting on 18 June 2013.

UK grocery retailer J Sainsbury plc (LON:SBRY) on Tuesday said it was holding advanced discussions over a deal to take full control of Sainsbury’s Bank, a joint venture with Lloyds Banking Group plc (LON:LLOY).

The statement confirmed media reports from the weekend that the two JV partners were negotiating a transaction.

Sainsbury’s Bank, currently equally owned by J Sainsbury and Lloyds Banking Group, was set up in 1997, the first bank to be opened by a UK supermarket chain.
It offers products such as insurance, credit cards, savings and loans.

The statement from J Sainsbury provided no further details. The company is due to publish its financial results for 2012-2013 tomorrow.

US natural and organic products specialist The Hain Celestial Group Inc (NASDAQ:HAIN) said it had bought UK premium organic baby food maker and distributor Ella’s Kitchen Group Limited, without disclosing the price.

With this acquisition, Hain Celestial has set up the Global Infant, Toddler & Kids division under Hain Celestial US, to be headed by Paul Lindley, Ella’s Kitchen’s founder, the buyer said.

The addition of Ella’s Kitchen, with a portfolio of 80 branded organic baby food products and some USD70m (EUR54m) in sales last year, complements the buyer’s Earth’s Best line of infant, toddler and kids products, while allowing opportunities for further expansion in the UK, Hain Celestial said.

The buyer also expects the acquisition to contribute to its EPS in 2014.
For his part, Lindley, now the CEO of Global Infant, Toddler & Kids, sees the deal to ensure further growth for the company he created seven years ago, he said.

UK drugmaker GlaxoSmithKline Plc (LON:GSK) has hired JPMorgan Chase & Co (NYSE:JPM) and Greenhill & Co Inc (NYSE:GHL) to help it offload nutritional drink brands Lucozade and Ribena, a spokesperson told Reuters today.

According to the representative, many lenders had shown interest in being GSK consultants on the sale.

Last month, GSK said it had decided to dispose of the specific brands in a drive to reshape its business, improve strategic focus and bolster its growth profile.

Reuters added that Japanese diversified company Suntory Holdings Ltd and buyout firms The Blackstone Group LP (NYSE:BX), BC Partners Ltd, PAI Partners, Lion Capital LLP, Bain Capital LLC, CVC Capital Partners Ltd and KKR & Co LP (NYSE:KKR) are all said to be interested in the two operations.

According to Deutsche Bank AG (ETR:DBK) analysts, the sale should fetch over GBP1.5bn (USD2.3bn/EUR1.8bn), the news agency said.