By Jennifer Booton

Rue21 (RUE) inked a deal on Thursday, to be acquired by private-equity firm Apax Partners for $1.1 billion in cash -- a move it says will deliver "substantial and certain value" as it looks to grow its store base and build out its e-commerce platform.

At $42 a share, the transaction represents a 23% premium to the Warrendale, Pa.-based teen-apparel retailer's closing price on Wednesday. The deal will return Rue21 to private management.

Apax has long held a stake in Rue21. The firm's chief executive, John Megrue, said he's worked closely with Rue21's Bob Fisch to support the company's growth -- from less than 100 stores at the time of the initial investment in 1998 to more than 900 today.

"We are very proud of the growth that Rue21 has achieved," Megrue said, who also serves as a partner in Apax's retail and consumer team. "Apax is excited to continue the journey with the company's senior management team."

Fisch said the deal allows Rue21 to focus on achieving its long-term objectives, including growing its business to more than 1,700 stores in the U.S. and implementing new initiatives such as e-commerce and the rueMan accessories line.

"We are proud that a sophisticated investor such as Apax continues to believe in our core strategy and recognizes our value-generating capabilities," he said.

The Rue21 board approved of the terms of the deal at the unanimous recommendation of a special committee comprised of three independent directors, while the two Apax partners who sit on the Rue21 board and Fisch recused themselves from the vote.

As part of the agreement, Rue21 has entered into a 40-day "go-shop" period, where it will be able to actively solicit and evaluate potentially superior offers. If Rue21 proceeds with a superior offer, the successful competing bidder would be on the hook for a low termination fee of 1%, roughly $10 million.

A major shareholder of Rue21, SKM II, which owns about 30% of the retailer's outstanding shares, has already agreed to vote in favor of the Apax transaction or a different one should it surpass the current proposal, though it would still remain subject to approval by a majority of Rue21 shareholders.

"This transaction is the result of diligent analysis and thoughtful deliberations by the Special Committee over many months with the assistance of our advisors," the committee's chairman, Bruce Hartman, said in a statement.

Meanwhile, Rue21 announced preliminary earnings per share of 44 cents for the period ended April 30, below the consensus view of 48 cents, according to a Thomson Reuters poll. Revenue climbed 9.1% despite a 4.6% decline in same-store sales.

Shares of Rue21 rose 23% during Thursday's trading, to close at $42.

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