GB Merchant Partners sells Spencer’s(5)

Gordon Brothers’ private equity arm has sold specialty retailer Spencer’s Gifts to ACON Investments after streamlining its business and redesigning its stores.

GB Merchant Partners, the private equity arm of Boston-based global investment firm Gordon Brothers Group, has exited its investment in Spencer Gifts Holding, the US company that runs specialty retail chains Spencer’s and Spirit Halloween. The company was sold to Washington DC-based ACON Investments and Spencer’s management.

ACON will have majority control of the company, while GB Merchant Partners will retain a minority stake.

GB Merchant Partners bought the retailer from Vivendi Universal Entertainment in May 2003, when it was a “true corporate orphan”, according to principal and managing director Matthew Kahn.

“It was getting no attention, and had no management or leadership,” Kahn said.

GB Merchant Partners replaced ten of the company’s top 12 executives, installing Steve Silverstein, the former president of Linens ’n Things, as chief executive, and GB Merchant Partners partner Ike Silvera as chief financial officer. Silverstein will continue in his current role after the acquisition by ACON is completed.

GB Merchant Partners also closed several unprofitable divisions, including upscale offshoot Dapy and blacklight product retailer Glow, and shut down Spencer’s UK businesses. The firm then “radically” redesigned Spencer’s store layout and streamlined the chain’s operating procedures. The firm also significantly grew Spirit Halloween.

GB Merchant Partners closed its debut fund on $320 million (€238 million) in January. The fund invests in retail and consumer products companies in the middle market, and seeks to make investments of between $15 million and $50 million.

The firm has backed Canadian chocolate seller Laura Secord, personalised gift chain Things Remembered and party supply store Party City.