Children's clothing retailer Gymboree agreed to a takeover by private investors for about $1.8 billion - making it one of the biggest buyouts of the year.
The deal would give Gymboree shareholders a 57% premium since Sept. 30, when reports of a takeover first surfaced. Still, Gymboree may seek additional takeover proposals for another month, according to a statement.
Presuming the deal gets done, Bain Capital would get more than 1,000 stores in North America and Australia.
"It's an excellent deal for Gymboree shareholders with a valuation well above what many were expecting," said Lee Giordano, an analyst at Imperial Capital in New York.
Gymboree stock rocketed 22%, or $11.88, to $64.83 yesterday. The shares have climbed 49% this year.
"Children's apparel is more predictable than teen apparel because it's less influenced by fashion and, in recessionary times, parents tend to spend more on their kids than they do on themselves, so it's resilient," Giordano said.
Although the company, which also operates operates Janie and Jack shops and Crazy 8 stores, has seen its sales growth slow for three straight years, annual profits have surged five consecutive years.
Gymboree has benefitted from its "Gymbucks" program, where customers spending above a certain limit receive coupons they can then redeem for future purchases.
Since 2006, Bain has made three other deals involving retail or apparel companies, buying Edgars Consolidated Stores for $3.7 billion in 2007, Burlington Coat Factory for $1.9 billion in 2006 and Lilliput Kidswear for $66 million this year.
SOURCE: NY Daily News - news wire services
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