THE DEAL: Chico’s pays $205 million for Boston Proper

Date: 17-Aug-2011

by Lou Whiteman

Clothes retailer Chico's FAS Inc. on Wednesday, Aug. 17, said it would acquire privately held Boston Proper Inc. in a $205 million deal designed to boost its sales of women's fashion.

Boca Raton, Fla.-based Boston Proper is a direct-to-consumer retailer of high-end women's apparel and accessories, generating revenue of about $110 million in its fiscal 2010 via online and catalog sales. The company claims to have increased profit and customer base in each of the past three years.

For Fort Myers, Fla.-based Chico's, which operates 1,221 stores in 48 states under the Chico's, White House/Black Market and Soma Intimates brands, the deal is seen as a complement to existing operations and a way to expand nonstore sales.

"Boston Proper's brand focus is highly complementary to our existing brands' customer experience, adds significant volume to our direct-to-consumer channel and provides us new opportunities to grow market share," CEO David Dyer said in a statement. "Boston Proper's talented management team can now accelerate its strategic initiatives to grow revenues and profitability by leveraging our capabilities."

Chico's has been mentioned as a potential target for private equity firms due to its relatively cheap valuation and strong cash balance sheet. The company had no debt and $566.22 million in cash as of April 30 but appears more interested in seeking out acquisitions than searching for a buyer.

Dyer, who came to Chico's in January 2009, has direct-to-consumer experience as a former CEO of Land's End Inc.

Post-deal Boston Proper will operate as a standalone division within Chico's FAS, with current CEO Sheryl Clark remaining as president of the unit. In a statement Clark said that "working closely with Dave and his management team, our focus will be to accelerate our growth by delivering more value to our customer base and attracting new customers to our brand."

Chico's FAS was advised by Peter J. Solomon Co., while Boston Proper was advised by Janney Montgomery Scott LLC.

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