Claire's Stores said Tuesday (20 March) that it had agreed to be acquired and taken private for US$3.1bn by private-equity firm Apollo Management following a three-month plus search for "strategic alternatives" for its business.

If the deal is approved, Claire's stockholders would receive $33 a share in cash. The price represents a 3.5% premium to the $31.88 close of Claire's shares on the New York Stock Exchange Tuesday after a $1.12, or 3.6%, advance. Shares closed at $31.91 on 30 November of last year, just before Claire's disclosed that it had engaged Goldman, Sachs & Co to seek alternative forms for its business.

Until it was reported to have pulled out of the bidding for Claire's last week, Apax Partners, which backed Phillips-Van Heusen's acquisition of the Calvin Klein brand, was considered the frontrunner in the search for a buyer for Pembroke Pines, Florida-based Claire's.

Bonnie and Marla Schaefer, co-chairmen and co-chief executive officers of Claire's, issued a joint statement on Tuesday saying, "The decision to sell the company that our father founded was reached after an enormous amount of soul searching over time and brings our strategic review to a successful conclusion. After reviewing the final bids, our board of directors unanimously concluded, after in-depth consideration, that this transaction with Apollo is in the best interests of our shareholders."

The Schaefer family, which has the largest block of shares in Claire's, albeit a minority of them, has entered into a separate agreement to vote its shares in favour of the merger.

Rowland Schaefer founded Fashion Tress Industries, a wig manufacturer, in 1961 and acquired Claire's, then a small Chicago, Illinois-based costume jewellery chain, 12 years later. Although it's yet to release its results for the fourth quarter of 2006, its sales in the 12 months through October 2006 were $1.42bn. It operates about 3,000 stores carrying moderately-priced jewellery and accessories in North America and western Europe and also has a joint venture with Aeon Co that operates nearly 200 stores in Japan.

"We believe that the increased flexibility available to a private company will enable Claire's to capitalise on the many opportunities before it, both here and abroad," said Peter Copses, a senior partner of Apollo. "We have a long track record of successful investment in the retail industry and are firmly committed to Claire's continued growth as a highly successful global specialty retailer."

In addition to Goldman Sachs, Claire's was advised by Peter J Solomon Co, which rendered a fairness opinion to the board, and Simpson Thacher & Bartlett on legal matters. Tri-Artisan Partners advised Apollo on the investment, while Morgan, Lewis & Bockius served as Apollo's legal advisor. Apollo will receive financing from Bear Stearns, Credit Suisse and Lehman Brothers.

Apollo has previously made investments in retailers including Linens 'n Things, Zale Corp and, prior to its consolidation as part of Saks Inc, Proffitt's Department Stores.