Redcats Group, the home shopping arm of French luxury goods group PPR, is to buy United Retail Group Inc for $198.9m in a move that will give the company its first national retail store base in the US and shore up its position in the growing women's plus size apparel market.

Under the terms of the deal, which has been unanimously approved by the boards of directors of both companies, Redcats' USA subsidiary will offer $13.70 per share in cash for United Retail.

This represents a 23% premium on the US retailer's share price in the last three months and an 82% premium to its closing price on 10 September the companies said in a statement early today (11 September).

Mr Raphael Benaroya, United Retail Group's chairman, president and chief executive officer, said the merger agreement with Redcats USA "will create a formidable entity in specialty retail" and provides "a great growth opportunity."

It will give catalogue and online apparel marketer Redcats access to United Retail's 483 Avenue stores selling large-size women's fashions, footwear and accessories.

Thierry Falque-Pierrotin, Redcats Group chairman and CEO commented: "This acquisition will strengthen Redcats USA's position in the growing women's plus size apparel market.

"United Retail is complementary to Redcats USA in terms of target customer, and its national retail store base will be additive to our leading positions in the catalogue and e-commerce channels. The combination will create a multi-channel market leader."

Eric Faintreny, chief executive officer of Redcats USA added: "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 US market across all our channels."

The merger is expected to close by the end of 2007. Raphael Benaroya, United Retail Group's chairman, president and chief executive officer, and George R Remeta, United Retail Group's vice chairman and chief administrative officer, will remain with the company for a transition period of at least one year.