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Bain to Buy Burlington Coat Factory

Private equity buyers continued to show an affinity for retailers, as Burlington Coat Factory (BCF) announced Wednesday an agreement to be sold to Bain Capital for $2.06 billion, or $45.50 a share, in cash.

While the deal is still subject to approval from shareholders, Bain has received commitments from the Milsteins, Burlington Coat's founding family that owns 62% of the company, to vote for the sale.

"We are thrilled that a transaction with Bain Capital delivers significant value to our stockholders," said Monroe Milstein, the company's chairman and chief executive, in a statement. "We are very proud of what the company has accomplished over the past 30 years."

Shares of Burlington Coat Factory have jumped 11% in January as word traveled that buyout talks for the company were under way. The shares were halted for trading Wednesday morning at $44.58.

Founded in 1972 by the Milstein family, Burlington Coat Factory expanded from a single store selling coats to a chain of 367 department stores in 42 states.

Flush with cash, the private equity industry has shown an appetite lately for taking retailers private in leveraged buyouts. The rise of discount chains such as Wal-Mart (WMT - Get Report) has left the business models of many companies looking outdated, but financial buyers aim to unlock hidden value on their balance sheets by selling off real estate and other assets. Last year, companies including Toys R Us and Neiman Marcus were scooped up, and investors on Wall Street are expecting a more deals to come in 2006.

Goldman Sachs (GS) acted as financial adviser to the company and rendered a fairness opinion on the deal. Hughes Hubbard & Reed LLP acted as legal counsel. Kirkland & Ellis LLP provided legal counsel to Bain Capital.

Burlington Coat Factory said it will filed a proxy statement with the Securities and Exchange Commission containing more information about the deal.

"Burlington Coat Factory is a well-managed retail business with a strong consumer following, high-quality product offerings and good growth prospects," said Jordan Hitch, a managing director with Bain, in a statement. "We are delighted to have the opportunity to partner with the experienced management team to build on the company's track record of success in merchandising and store operations and to continue to grow the store portfolio."

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