Redcats USA acquires United Retail Group

Could Redcats USA be contemplating retail? The multititle cataloger announced on Sept. 11 it bought plus-size women’s apparel retailer United Retail Group for $198.9 million, or $13.70 per share in cash. Both companies’ boards of directors approved the deal, which is expected to close by the end of the calendar year.

Rochelle Park, NJ-based United Retail Group operates 483 Avenue stores along with the Avenue.com Website. New York-based Redcats USA is a catalog division of French conglomerate Pinault-Printemps-Redoute (PPR). Its brands include Chadwick’s, Roaman’s, Woman Within, Jessica London, KingSize, and BrylaneHome.

As part of the deal, United Retail Group Chairman/CEO Raphael Benaroya will tender all of his shares to Redcats USA. After the sale is completed, Benaroya and George R. Remeta, United Retail Group’s vice chairman/chief administrative officer, will remain with the company for a transition period of at least one year.

Neither Redcats USA nor United Retail Group would comment. But a likely factor in the deal is that Redcats lost its Lane Bryant catalog this year, when the trademark to that title reverted back to Bensalem, PA-based retailer Charming Shoppes. Charming Shoppes has owned and operated the Lane Bryant stores since 2001. What’s more, this is not the first time the two apparel marketers have teamed up. Redcats developed an 84-page Avenue catalog for United Retail in March 2006. (Avenue had mailed an apparel book for nearly three years before closing the title in 2003.)

Claire Gruppo, president of New York-based investment bank Gruppo, Levey & Co., believes the deal will benefit both sides. “From a strategic perspective, I think it could be great,” she says. “Obviously, Redcats is a very sizable multititle cataloger and Internet seller of women’s apparel and has a similar demographic. Avenue is a little younger, hipper, urban, and primarily a retail channel.”

Still, Gruppo notes, “I was surprised Redcats was interested in a company with such significant retail presence, but why not?” Redcats’ growth in catalog marketing “is flat and may be declining slightly,” she adds. “To go into another channel is smart.” Plus, the deal can help Avenue finally crack the catalog market. “United Retail Group has been trying for a long time to get into various direct channels effectively,” Gruppo says.

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Redcats USA Acquires United Retail Group

New York-based multititle cataloger Redcats USA announced Sept. 11 it bought United Retail Group for $198.9 million, or $13.70 per share in cash. United Retail Group is a specialty retailer of plus-size women’s fashion apparel. Both companies’ boards of directors approved the deal, which is expected to close by the end of the calendar year.

As part of the deal, United Retail Group Chairman/CEO Raphael Benaroya will tender all of his shares to Redcats USA. “We are very pleased to have entered into this merger agreement with Redcats USA,” Benaroya said in a release. “We believe that the combination of our two businesses will create a formidable entity in specialty retail.”

Redcats USA CEO Eric Faintreny added: “United Retail has a very strong brand in the Avenue retail chain and a team of experienced and talented associates. The integration of Avenue into our portfolio of high-growth retail brands strengthens and diversifies our business and promises to create strong expansion opportunities. We look forward to working with Raphael Benaroya and his team to further grow and strengthen this already successful brand in the U.S. market across all our channels.”

Stuart Rose, managing director for Wellesley, MA-based investment bank Tully & Holland, says of the deal: “It’s interesting that Redcats is going to the multichannel world. A strong catalog/Internet player is now going for brick-and-mortar. I’m sure they will end up —at some point–leveraging the Women Within (former Lane Bryant) brand. Over the past several years we have seen the strongest players in the multichannel world have brick-and-mortar, catalog, and Internet. Here’s Redcats’ attempt to do the same.”

After the deal is completed, Benaroya and George R. Remeta, United Retail Group’s vice chairman/chief administrative officer, will remain with the company for a transition period of at least one year.

Rochelle Park, NJ-based United Retail Group operates 483 Avenue stores along with the Avenue.com Website. New York-based Redcats USA’s brands include Chadwick’s, Roaman’s, Woman Within, Jessica London, KingSize, and BrylaneHome.

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