Private Equity Deal Summary

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Private Equity - Deal Summary The Gymboree LBO Deal Summary Children's clothing retailer Gymboree Corp. agreed to be bought by Bain Capital LLC for $1.8 billion, a price that signals the private-equity firm's willingness to pay a premium for a brand that has a loyal following. It also reflects growing private equity interest in the slowly recovering US retail sector. The deal, for $65.40 a share, represents a 23.5 percent premium over Gymboree’s Friday closing price, and a 57.4 percent premium over the company’s stock price on Sept. 30 before reports of a possible sale began to emerge. Gymboree, which was founded in 1976 and went public in 1993, operates 1,037 stores in the United States, Canada, Puerto Rico and Australia under four brands: Gymboree, Gymboree Outlet, Janie and Jack, and Crazy 8. It focused on toddlers and children under 12. It also had a network of mostly franchised children’s play locations, spanning some 30 countries outside the US. Part of Gymboree’s allure is that beyond having the kind of balance sheet that makes it an appealing acquisition, Gymboree continues to have a path to expansion. It opened its first Crazy 8 store, a more value-oriented children’s clothing chain, in August 2007, and now has 133 stores nationwide. What’s more, according to Jordan Hitch, managing director at Bain, it was attracted to Gymboree because of its “incredible brand strength and a large population of extremely satisfied customers”. Another reason why Bain wanted to buy Gymboree is that Gymboree has performed reasonably well despite the recession: annual sales have stayed flat for the past two years, at around $1 billion. Children's apparel spending has weathered the recession much better than other clothing categories, because parents will eliminate spending on themselves before they cut back on their kids. “Children’s apparel is more predictable than

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