August 24, 2009, 12:00 AM

Advent International seals a deal to acquire Charlotte Russe

The Boston private equity firm, which invests in specialty retail chains, will acquire Charlotte Russe in a deal valued at $380 million. The deal has been approved by each company’s board of directors.

 

Young women’s apparel retailer Charlotte Russe Holding Inc. will soon be under new ownership.

Charlotte Russe, No. 464 in the Internet Retailer Top 500 Guide, has announced an agreement to be acquired by Advent International Corp., a Boston private equity firm, in a stock deal valued at $380 million.

The merger, which has already been approved by each organization’s board of directors, will make Charlotte Russe, the fastest-growing Top 500 chain retailer with 2008 web sales of $11 million, a privately held company. Advent, which also owns stakes in German apparel discount chain Takko Fashion and French apparel retailer Gérard Darel, will pay Charlotte Russe approximately $17.50 per share to acquire the company. “We have worked diligently, increasing our focus on individual store performance metrics, better merchandising and implementing best retail practices to improve operational performance, profitability and shareholder returns,” says Charlotte Russe CEO John Goodman. “Advent brings in-depth sector knowledge of the rapidly changing retail landscape and an exceptional track record of supporting growth.”

Charlotte Russe, which uses GSI Commerce Inc. as its e-commerce service provider, announced in January that it was evaluating a number of strategic alternatives, including a possible sale. Advent, which has a history of investing in specialty apparel retail chains, is acquiring Charlotte Russe because of the chain’s growth opportunities in the apparel market for young women in their teens and 20s, the company says. “We are excited to purchase Charlotte Russe and build on the foundation established by the management team,” says Advent managing partner David Mussafer.

Net sales for Charlotte Russe increased 4.9% to $202.7 million in the third quarter of the 2009 fiscal year, compared to $193.2 million in the third quarter of fiscal 2008. Net income declined year over year 4.5% to $6.3 million from $6.6 million. Charlotte Russe is the latest in a string of apparel retailers and direct marketers to be acquired this summer. In July private equity firm Golden Gate Capital acquired Eddie Bauer Holdings Inc. for $286 million in cash and in June spent $75 million to acquire the assets of J. Jill from The Talbots Inc.

In addition, Signature Styles LLC, a newly formed unit of private investment firm Patriarch Partners LLC, acquired in June the operating assets of Spiegel Brands Inc., including the brands Spiegel, Newport News and Shape fx and their associated catalogs and web sites. Terms of the deal weren’t disclosed.

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