Burlington Coat Factory goes to Bain

Boston-based Bain Capital has agreed to acquire Burlington Coat Factory Warehouse Corp. for $2.06 billion (€1.7 billion), valuing the publicly held clothing retailer at $45.50 a share.

Burlington Coat Factory was sold to Bain Capital for $2.06bn.

The sale of Burlington was not unexpected, as the company announced in June of last year that it had retained Goldman Sachs to help it explore strategic alternatives. The company, which booked roughly $3.17 billion in sales for the fiscal year ended May 28, 2005, had been expected to fetch as much as $50 a share. However, the purchase price, based on initial estimates, still came in at the high end of analyst expectations.

Lehman Brothers for instance, in a July research note, predicted that the company would be sold for between $36 and $45 a share.

According to a story in the New York Post, Bain Capital emerged as the favourite earlier this month, moving ahead of other private equity bidders, such as Kohlberg Kravis Roberts, Apollo Management and Texas Pacific Group.

Burlington, based in New Jersey, was founded by the Milstein Family. The Milsteins and other affiliated entities control around 62 percent of the company’s outstanding stock, and the family has already agreed to vote in favour of the deal.
 
In a statement, Bain managing director Jordan Hitch hinted that current Burlington management, led by Monroe Milstein, would stay in place.

“Burlington Coat Factory is a well-managed retail business with a strong consumer following, high-quality product offerings, and good growth prospects,” he said.

Burlington operates 367 stores in 42 states. The company’s stock price had hovered around $36 a share prior to news that it was seeking a sale.

Kirkland & Ellis served as legal counsel to Bain in the transaction, while Hughes Hubbard & Reed represented Burlington.