Under the terms of the agreement, Party City shareholders will receive $17.50 per share in cash for each share of common stock. According to Party City, the company's board of directors unanimously approved the transaction and has recommended to Party City's stockholders that they approve the transaction.
Michael Tennenbaum, chairman of the executive committee of Party City says that the company believes the transaction will create opportunities for Party City's customers, employees and franchisees that the retailer could not have capitalized on as a stand-alone company. "At the same time, the shareholders will realize an attractive selling price," he says.
About the 20-year-old company, Robert J. Small, managing director of Berkshire Partners and chairman of AAH Holdings, says, "The party retailing industry is a durable and growing business with tremendous potential; we are excited about Party City and its extensive national network of company-owned and franchised stores."
Founded in 1986, the Party City has developed from a one-stop party store to a chain retailer of party supplies with 249 company-owned stores and 250 franchise locations. For the fiscal year ended July 2, 2005, Party City reported revenues of approximately $500 million, and total chain-wide net sales of approximately $1 billion.
The acquisition, which is subject to receipt of debt financing, is expected to close by the end of 2005 or the beginning of 2006. AAH Holdings, which also owns Amscan Inc., plans to finance the acquisition through a combination of equity contributed by affiliates of Berkshire Partners and Weston Presidio, and debt financing provided, directly or through certain affiliates, by Goldman, Sachs & Co. and Banc of America Securities.
Goldman Sachs acted as financial adviser to AAH Holdings on the transaction, while Ropes & Gray LLP served as the group's legal adviser. Credit Suisse First Boston LLC acted as exclusive financial adviser to Party City in connection with this transaction, and Latham & Watkins LLP served as legal adviser to the retailer.
Boston-based Berkshire Partners invests in mid-sized private companies through six investment funds with aggregate capital commitments of approximately $3.5 billion. The firm's investment strategy is to seek companies that have strong growth prospects and to partner with management teams teams are interested in being owners of the companies they operate. Weston Presidio, founded in 1991, is a private equity firm with over $3.3 billion under management to invest through growth equity investments, management buyouts and recapitalizations.
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