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Oct 11, 2010 10:26 AM by Nichole Larkey

Gymboree agrees to $1.8 billion buyout by Bain

SAN FRANCISCO (AP) - Children's clothing retailer Gymboree Corp. is being purchased by affiliates of asset management firm Bain Capital for $1.8 billion.
Gymboree said Monday that the deal is for $65.40 per share, a 24 percent premium to Gymboree's Friday closing stock price of $52.95.
The retailer, based in San Francisco, currently has about 27.3 million shares outstanding.
Gymboree's stock surged $12, or 22.7 percent, to $64.95 in early trading.
The news did not come as a surprise, as speculation about a potential acquisition had been brewing for a few weeks. Last week a report from The New York Post said Gymboree was seeking a deal between $55 and $60 per share, which the proposed buyout from Bain Capital exceeds. Aside from Bain, the report said KKR, Apax Partners, Irving Place Capital and Apollo Management were all potential bidders.
Bain Capital's affiliates are likely to start a tender offer shortly after an agreement is executed. The firm has committed financing from Credit Suisse and Morgan Stanley in an amount necessary to complete the acquisition. Bain Capital may push back the closing under certain circumstances in order to complete the financing, the companies said.
"Gymboree is a terrific company with incredible brand strength and a large population of extremely satisfied customers," Jordan Hitch, Bain Capital managing director, said in a statement.
Gymboree may seek third-party offers for 40 days through Nov. 20.
Gymboree's board unanimously approved the proposed deal. The acquisition is expected to close by the end of the year if the tender offer is successfully completed.
Gymboree, whose stores include Crazy 8, Janie and Jack and its namesake, had 1,037 stores as of Oct. 2.

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