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Apax Partners Plans Purchase of Rue21

Apax Partners has cut a deal to buy teen retailer Rue21 Inc. for $1.1 billion, in an all cash transaction. The deal values the firm at $42 per share 23.1 percent over its $34.12 closing price on Wednesday. Board members have already approved the transaction, but two board members and chairman, president, and chief executive Bob Fisch recused themselves from the board vote.

The purchase agreement also will make Rue21 part of a 40-day “go-shop” process seeking better offers. If there are no other bids, the deal should close before the end of the year.

Rue21’s management team and Fisch have not signed an employment agreement with Apax Partners, but they have indicated that they are willing to work with any buyer.

John Megrue, CEO of Apax Partners U.S., told WWD, “I have worked closely with Bob Fisch to support the company’s growth from less than 100 store 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.”

The firm’s most recently acquired Cole Haan in February for $570 million. They also have previously acquired Tommy Hilfiger Corp. and Calvin Klein, but has since sold both firms to PVH Corp.

Rue is predicting diluted earnings of 44 cents per share on a 9.1 percent sales gain for the first quarter and a same store sales fall of 4.6%. Its parent company, Pennsylvania Fashions Inc., filed for bankruptcy protection in February 2002, but emerged in May 2003 as Rue21. The majority shareholder in that deal was Saunders, Karp, and Megrue, which merged with private equity firm Apax Partners Worldwide in February 2005.

Rue21 went public in November 2009, and targets young men and women between 11 and 17. Apax Partners Plans Purchase of Rue21


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