Acquisition of rue21, inc. by Funds Advised by the Private Equity Firm Apax Partners May Not Be in the Best Interests of rue21 Shareholders
Robbins Arroyo LLP is investigating the acquisition of rue21, inc. (NASDAQ: RUE) by funds advised by the private equity firm Apax Partners. On May 23, 2013, the companies announced the signing of a definitive merger agreement under which Apax Partners will acquire all outstanding shares of rue21 for $42 per share in cash. Robbins Arroyo LLP’s investigation concerns, among other things, whether the merger was motivated by any improper conflicts of interest since Apax Partners is already rue21’s largest shareholder and two principals of Apax Partners sit on rue21’s board of directors, including John F. Megrue, Jr. and Alex Pellegrini.
Is the Acquisition in the Best Interests of rue21 and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at rue21 is undertaking a fair process to obtain maximum value and adequately compensate its shareholders in the merger.
On March 21, 2013, rue21 released its fourth quarter and fiscal year 2012 financial results reflecting strong growth in net sales, adjusted net income, and adjusted earnings per share. Specifically, rue21 reported an increase in net sales of over 22% for the fourth quarter and over 18% for the full year, compared to the same periods in 2011. Adjusted net income for the fourth quarter increased by over 22% and by nearly 20% for the full year, compared to the same periods in 2011. Adjusted earnings per share for the fourth quarter were $0.65 compared to $0.52 for the fourth quarter 2011 and $1.87 in fiscal 2012 compared to $1.55 in fiscal 2011. Further demonstrating the company’s sustained economic performance and stellar business prospects, rue21 exceeded analyst earnings per share and net income expectations in the past nine quarters.
In announcing rue21’s financial results, Robert N. Fisch, the company’s President and Chief Executive Officer, touted that “Fiscal 2012 was another year of consistent top and bottom line growth for rue21, including gross margin and double-digit growth in net income. We continue to focus on the qualities that make rue21 appealing to our customers and our financial returns attractive to our shareholders….”
Given these facts, Robbins Arroyo LLP is examining the board of directors’ decision to sell rue21 now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Shareholders of rue21 have the option to file a class action lawsuit to secure the best possible price for themselves and the disclosure of material information so that they can vote on the transaction in an informed manner. Shareholders of rue21 interested in information about their rights and potential remedies can contact Darnell R. Donahue at (800) 350-6003 or you can complete the form below and we will contact you directly.