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Private Equity to Buy Restoration Hardware

By Staff -- Gifts and Dec, 11/9/2007 9:46:00 AM

Corte Madera, CA — A private equity firm will buy 100-plus-store home furnishings chain Restoration Hardware Inc. for $267 million, according to the San Francisco Chronicle. Greenwich, CT-based Catterton Partners will pay $6.70 per share in cash, or 2½ times the stock's Wednesday closing price.

Restoration stock rose 140 percent on the news, closing at $6.44 on Thursday. Restoration will solicit competing bids until December 13. If it accepts another offer, it will pay Catterton a $10.68 million termination fee. The deal is expected to close by April.

Like fellow home chains Bombay Co. and Pier 1, Restoration Hardware has been struggling. Last year, it earned $3 million on revenue of $713 million; in 2005 it lost $29 million on $582 million in revenue. In August, Restoration said it would cut 100 jobs at its headquarters to save $9 million a year. In April, Restoration told analysts it would temporarily suspend store expansion while it focuses on increasing direct-to-consumer sales, which it expects to grow from a third of sales to half within three years. Last year, the company also added the direct-to-consumer-only Brocade Home brand.

Restoration CEO Gary Friedman is participating in the buyout, the company said in a statement. Catterton’s other holdings include Build-A-Bear Workshop and several mid-market restaurant chains.

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