This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

TheDeal: Apax Offers to Take Back Rue21 in $1.1B Deal

NEW YORK ( TheStreet) -- rue21 Inc. (RUE), the Pennsylvania-based kids clothing retailer that private equity firm Apax Partners LP took public in 2009, will be bought out by the very same leveraged buyout shop.

Apax announced Thursday the $42 per share, or $1.1 billion, deal, which is more than double the company's stock price from its fall 2009 offering.

There is a 40-day go-shop for the target, and a $10 million termination fee.

At the time Apax brought rue21 to market, it held a majority stake of more than 60%, and did not sell stock at the time of the initial public offering. In early 2010, after the stock had risen more than 50%, the PE firm exited much of its position, reducing its stake to about 29%, which it held through its SKM II funds.

The announcement said the SKM funds were voting their shares in favor of the transaction.

According to a statement Apax made at the time of the secondary share sale, it realized a 7.3 times return on its investment. At that time, rue21 operated 545 stores in 43 states.

When the LBO was announced Thursday, rue21's footprint had expanded to more than 930 locations.

Bob Fisch, rue21's chairman, president and CEO, said he will recuse himself from the deal vote, along with two board directors from Apax.

Apax came to own rue21 by way of its absorbing midmarket LBO firm Saunders Karp & Megrue. When rue21 went public in a $124 million IPO in November 2009, the company priced shares at $19, above the expected range.

Rue21 also issued preliminary results for its first quarter ended April 30. While net sales increased 9.1%, comparable store sales decreased 4.6% year-over-year. Diluted earnings per share is expected to be 44 cents, according to the company.

Fisch blamed unseasonably cool weather, higher payroll taxes and delayed tax refunds on the less than desirable results.

The company's special committee is using financial adviser Perella Weinberg Partners' Gary Barancik and Kirkland & Ellis LLP's David Fox, David Feirstein, Ashley Gregory and Richard Brand and Potter Anderson & Corroon LLP are its legal advisers. Perella Weinberg was represented by legal adviser Weil Gotshal & Manges LLP's M&A partners Michael Aiello and Jackie Cohen.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
RUE $41.99 1.82%
AAPL $112.10 0.71%
FB $93.34 0.58%
GOOG $649.00 0.55%
TSLA $241.46 0.00%


Chart of I:DJI
DOW 16,790.19 +13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASDAQ 4,748.3610 -32.9030 -0.69%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs