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Gymboree Paves Way For Retail Takeovers

Gymboree's $1.8 billion acquisition by Bain Capital suggests more private-equity buyouts are on the horizon.

(Gymboree article updated with analyst downgrade.)

NEW YORK (

TheStreet

) --

Gymboree

(GYMB)

's acquisition by

Bain Capital

could be an indication that other retailers in the space are also prime takeover candidates.

The children's apparel retailer announced on Monday that it is being bought out by the private-equity firm for $1.8 billion, or $65.40 a share.

The deal, which represents a 57.4% premium over Gymboree's share price at the close on Sept. 30, is expected to close by the end of the year. This is also a 23.5% premium over Friday's close.

>>12 Retail Takeovers: Rumors Run Rampant

Gymboree could still solicit other bids until Nov. 20.

"

This is a valuation equal to the most richly valued names in our universe, despite what we believe to be modest growth potential and operating margin expansion," Stifel Nicolaus analyst Richard Jaffe, wrote in a note. "Clearly, private equity investors value these companies more richly than stock market investors."

Susquehanna Financial Group analyst Thomas Filandro downgraded Gymboree to neutral from positive following the announcement.

"Although we believe the potential exists for a higher private equity or strategic buyer bid, we view the risk/reward profile from an investor standpoint as less compelling," he wrote in a note.

This level of private equity interest suggest other companies may also be considered for a takeout, including

Aeropostale

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(ARO)

,

Chico's

(CHS) - Get Report

and

Children's Place

(PLCE) - Get Report

, Jaffe notes.

Shares of Gymboree are surging 22.5% on the news, exchanging hands at $64.90. Children's Place hit a 52-week high earlier in the day of $56.68.

-- Written by Jeanine Poggi in New York.

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