June 5, 2012, 11:03 AM

A private equity firm acquires a majority stake in Party City

The transaction for the Top 500 e-retailer is valued at $2.69 billion.

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Thomas H. Lee Partners L.P., a private equity firm, will acquire a majority stake in Party City Holdings Inc., a party supplies retailer, in a recapitalization transaction valued at $2.69 billion. Recapitalization is a corporate reorganization that centers on altering the way capital is handled within a company. A recapitalization transaction infuses capital into the company.

Advent International Corp., Berkshire Partners LLC, Weston Presidio and Party City management executives, who currently own Party City, will continue to hold significant minority stakes following the recapitalization.

"Party City leads the $10 billion retail party goods industry in terms of product selection and retail network," says Todd M. Abbrecht, a managing director at Thomas H. Lee Partners. "We look forward to working closely with the team at Party City to maximize its scale and vertically integrated business model to continue to grow its business."

Bank of America Merrill Lynch and Moelis & Company acted as financial advisors, and Weil, Gotshal & Manges LLP acted as legal advisor to Thomas H. Lee. Goldman Sachs & Co. and Deutsche Bank Securities Inc. acted as financial advisors to Party City. Ropes & Gray acted as legal advisor to Advent International, Berkshire Partners, Weston Presidio and Party City.

"From its founding in 1947, the company has evolved to become a world-class company with widely recognized brands, a broad product offering, a strong global sourcing model and a category-defining retail concept," says Gerald C. Rittenberg, Party City's CEO. "The management team and I look forward to welcoming Thomas H. Lee as an investor and working with the expanded shareholder group to position us for future growth across each of our channels. We are appreciative of the terrific partnership and guidance of our existing investors in the development and execution of our strategic plan."

Party City's products are available in more than 40,000 stores worldwide, as well as in its own retail network of approximately 825 party superstores and 400 temporary Halloween locations. The company also sells through its e-commerce site.

Party City is No. 302 in the Internet Retailer Top 500 Guide.

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