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Restoration Hardware will go private

Specialty home decor and home furnishings retailer Restoration Hardware has been sold to private equity firm Catterton Partners for $267 million, in a move that will take the retailer private.

Restoration Hardware has seen several quarters of weakness due to an ultra-competitive home decor and furnishings environment. Strong competition from similar retailers, including Pottery Barn, Williams-Sonoma Home, West Elm, Pier 1 and Design Within Reach, combined with a downturn in the housing sector, led to losses in the company’s most recent fiscal quarter.

“We are excited about the opportunity to work with Catterton Partners, which has a successful track record and significant experience in the consumer and retail industries,” said Gary Friedman, Restoration Hardware chairman, president and CEO, in a statement. “We believe this partnership will provide us with important resources to execute our operating and growth strategies over the long term."

J. Michael Chu, managing partner of Catterton Partners, said, “By combining our respective expertise, we believe we can continue to evolve and grow the brand and become a dynamic force in the marketplace."

Under the terms of the agreement, in which Restoration Hardware will merge with a subsidiary of Catterton Partners, all of the company’s outstanding shares will be acquired for a price-per-share of $6.70.

The agreement still is subject to the approval of shareholders, as well as regulatory approval, but is expected to close in the first quarter of 2008.

In August, Restoration Hardware announced it would cut 100 jobs at the company’s Corte Madera, Calif.-based headquarters in order to save $9 million annually. In its second quarter, the company swung to a $5.5 million loss from $2.2 million in earnings last year.

Sales rose 2.2 percent to $183.8 million compared with $179.3 million last year.

Restoration Hardware has approximately 100 retail stores and eight outlet stores in 30 states, Washington, D.C., and Canada.


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