By Lisa Kerner
Charlotte, N.C., July 27 - Deb Shops, Inc. agreed to be acquired by Lee Equity Partners, LLC affiliate DSI Holdings, LLC for $27.25 per share. The equity value of the all-cash transaction is about $395 million.
The board of directors of Deb Shops has approved the agreement, which includes a $15 million termination fee.
Lee Equity said it will finance this acquisition through cash and new committed credit facilities. The transaction is slated to close in the third quarter of 2007.
Following the transaction's close, Allen Questrom, senior adviser of Equity, will bring his 40 years of retail apparel experience to his role as non-executive chairman of the company.
Warren Weiner, Deb Shops' current executive vice president, and Marvin Rounick, the company's current president and chief executive officer, will provide consulting services to the company for three years.
Rounick, Weiner and Jack Rounick, a director and assistant secretary of Deb Shops, and some of their affiliates agreed to vote their total of 64.3% of company stock in favor of the merger.
"We have had many wonderful accomplishments during our long and successful history, and this transaction serves as an important step in the growth of our business," Marvin Rounick stated in a company news release. "We are pleased that Lee Equity has expressed a commitment to continue to build and grow Deb Shops' business."
"In a very competitive junior apparel segment, Deb Shops is differentiated by its fashionable, value-oriented merchandise and strong positioning with junior regular and plus-size customers," Questrom added. "We look forward to growing the company's already strong customer base and continuing to roll out its plus-size merchandise offering."
Deb Shops was advised by Morgan, Lewis & Bockius LLP and Lehman Brothers, which also rendered a fairness opinion to the company's board. Lee Equity was advised by Bear Stearns and Weil Gotshal & Manges LLP. Barclays Capital will be the exclusive financing provider to the New York private investment firm for the transaction.
Philadelphia-based Deb Shops is a national specialty retailer operating 337 stores in 42 states under the DEB and Tops 'N Bottoms names.
| Acquirer: | Lee Equity Partners, LLC
|
| Target: | Deb Shops, Inc.
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| Transaction total: | $329 million
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| Price per share: | $27.25
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| Announcement date: | July 27
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| Termination fee: | $15 million
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| Expected closing: | Third quarter
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| Stock price for target: | Nasdaq: DEBS: $26.68 on July 26
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