PARIS — Seizing on high-potential business for its home shopping arm, PPR said Tuesday that its Redcats Group would acquire United Retail Group Inc. in a deal valuing the American plus-size retailer at $198.9 million.
Based in Rochelle Park, N.J., United operates 483 stores under the Avenue banner, boasting more than 2 million square feet of selling space, plus an online store. Redcats USA offered $13.70 a share in cash, a 23 percent premium on trading in the 90-day period ended Sept. 7. The deal should close by yearend.
Redcats said the acquisition would strengthen its position in plus-sizes, and add the brick-and-mortar channel to its stronghold with catalogues and e-commerce.
PPR has been bulking up its mail-order giant and last year acquired The Sportsman’s Guide Inc., which sells outdoor and golf clothing and equipment and footwear through catalogues and Internet sites.
Peter J. Solomon & Co. was the financial adviser for PPR on the transaction.
Redcats in the first half had strong results for La Redoute and Sportsman’s Guide, but setbacks at its children’s and family divisions.
Separately, United posted a 56 percent plunge in second-quarter earnings Tuesday. For the three months ended Aug. 4, net income fell to $2.2 million, or 16 cents a diluted share, from $5 million, or 35 cents, in the year-ago period on sales that declined 1 percent to $122.3 million from $120.9 million.
For the six-month period, earnings sunk 66.6 percent to $2.3 million, or 16 cents a diluted share, from $6.9 million, or 49 cents, in the year prior on sales that dropped 1.3 percent to $233.3 million from $230.3 million.
Mark Montagna, CL King analyst, said in a research note that the acquisition of United “would enable Redcats to put some of its brand names in the Avenue stores” and “market its stable of apparel catalogues/Web sites to the [United] customer base. Likewise, the United customers could be targeted with the Redcats catalogues/Web site.”