Charlotte Russe goes private, in $380M deal with Advent International

Bruised by a weak economy and hostile takeover fight, Charlotte Russe Holdings Inc. (CHIC) is going private.

The chain of mall-based clothing stores catering to young women agreed to sell to Advent International Corp., a $24 billion investment group that has already made investments in other apparel retailers including activewear chain Lululemon Athletica and British discount apparel chain New Look.
The two sides didn't give details on when they hope to close the deal, which is valued at $380 million.

Charlotte Russe has been hit by heavy competition, lower mall traffic, and a weak economy. Last month it reported a sales increase of 4.9 percent for the quarter ended June 27, but same-store sales were down 3.6 percent from the same time last year, and same-store sales for the first nine months of the fiscal year were down 7.1 percent below 2008.

After a disappointing holiday season and an attempted hostile takeover, the clothing chain announced in January it was looking at "strategic alternatives." In March, management said it had hired Cowen & Co. to look for buyers.

Charlotte Russe fought back a hostile takeover late last year by investment company Karp & Reilly, which offered $9 to $9.50 per share. Management turned the offer down as too low, sparking a proxy fight that dragged on until the company's annual meeting in April.

In a statement, chairman Jennifer Salopek underlined how Advent's $17.50 per share offer is 255 percent above where the company's stock was trading in January.

Of course, the markets had recovered considerably since hitting bottom in March, and knowing the company was up for sale must have attracted investors who anticipated that a buyer would pay a premium. The offering price was only 26.9 percent over Friday's stock close, and investors kept bidding up the stock; it rose almost 26 percent this morning and hit $17.36 by noon.

So other than a sudden reversal of fortune, anyone hoping to cash in on this deal is already locked in place. Too bad for Karp & Reilly, which had accumulated a nice stake during its takeover try -- but sold it after dropping its offer, at around $12 a share.
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