UK-based private equity firm Apax Partners is set to acquire American specialty apparel retailer rue21 under a $1.1bn definitive agreement.

The equity firm is said to be keen to further its retail portfolio that comprises Cole Haan and Takko Fashion with the acquisition of the retailer.

As per the terms of the agreement, Apax will acquire all outstanding shares of the retailer for $42 per share in cash, a premium of 42% to the 90-day volume weighted average price (VWAP).

Apax’s associated company SKM II has also voted in favor of agreement with the equity firm, however, agreeing to support a superior offer if the arrangement with Apax falls apart.

SKM, which merged with Apax in 2005, owns 30% interest in rue21.

rue21 chairman, president and CEO Bob Fisch stated that the company has achieved strong top and bottom line growth as both a
public and private company.

"This transaction will allow us to focus on achieving our long-term objectives, including growing our business to over 1,700 stores in the U.S. and successfully implementing new initiatives such as e-commerce and rueMan," added Fisch.

Apax Partners US CEO John Megrue stated: "I have worked closely with Bob Fisch to support the Company’s growth from less than 100 stores at the time of the initial investment in 1998 to over 900 stores today, and Apax is excited to continue the journey with the
Company’s senior management team."

Meanwhile, the retailer’s board has agreed to the takeover offer and has formed a special committee to conduct an initial 40-day shop-go process.

During this period, the committee will engage in talks with potential suitors to acquire rue21 offering a superior proposal.

Special Committee chairman Bruce Hartman remarked: "To ensure we are maximizing value for rue21 stockholders, we are also committed to running a comprehensive go-shop process to determine if there are any superior alternatives that may exist to the Apax transaction."

rue21 has opened 125 stores during fiscal 2012 and is set to open 1,000th store in the fourth quarter of 2013 to cross the 1,700 store mark under its global expansion strategy.