Deb Shops' last closing price before the announcement of the deal was $26.68. The parties expect to close the all-cash transaction sometime during the third quarter.

Deb Shops reported $83.8 million in net sales during its first quarter, a 2.3% increase from the same year-ago period. Net income for the period, which ended April 30, was $2.6 million, down from $2.7 million. Same-store sales rose 1.9% year over year in June and 0.2% in May.

Lee Equity is appointing Allen Questrom the non-executive vice chairman of Deb Shops and management says he "will provide significant strategic direction and leadership to the company's current senior management team." Questrom is credited with turning around J.C. Penney. He has also held executive positions at the former Federated Department Stores (now Macy's Inc.), Neiman Marcus and other retail companies.