Redcats grows plus-size market share with United Retail Group acquisition

Direct marketer and online retailer Redcats USA Inc. is planning to add market share by acquiring United Retail Group Inc., parent of women’s plus-size retail chain Avenue and e-commerce site Avenue.com, for $198.9 million in cash.

The acquisition complements Redcats USA’s plus-size product line for women and men, whose master e-commerce site, OneStopPlus.com, includes four brands: Woman Within, Roaman’s, Jessica London and KingSize. Redcats USA, No. 28 in the Internet Retailer Top 500 Guide, is a subsidiary of Redcats Group.

United Retail Group operates 483 Avenue retail stores and Avenue.com, No. 292 in the Internet Retailer Top 500 Guide. Avenue.com had web sales of $21.4 million in 2006.

Under terms of the agreement, Redcats USA will offer to purchase all outstanding shares of United Retail Group for $13.70 per share in cash, an aggregate equity value of $198.9 million. The offer represents a 23% premium to the average of United Retail Group’s share price for the 90-day period ending Sept. 7, 2007, and an 82% premium to the closing price on Sept. 10, 2007.

The acquisition has been unanimously approved by the directors of both companies, and United’s board has unanimously recommended that common stock shareholders accept the offer. Raphael Benaroya, United’s chairman, president and CEO, also plans to include all of his shares in the offering.

“This acquisition will strengthen Redcats USA’s position in the growing women’s plus-size apparel market,” says Thierry Falque-Pierrotin, Redcats Group chairman and CEO. “United Retail is complementary to Redcats USA in terms of target customer, and its national retail store base will be additive to our leading positions in the catalog and e-commerce channels. The combination will create a multi-channel market leader.”

Redcats USA is expected to launch the tender offer soon, the company says, and the merger is expected to close by the end of 2007. The offer is not conditioned upon financing arrangements, Redcats says. United’s Benaroya and George R. Remeta, vice chairman and chief administrative officer, will remain with the company for a transition period of at least one year following the acquisition.