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Restoration Hardware, 33% Off

January 26, 2008 Restoration Hardware has agreed to accept an offer from private equity firm Catterton Partners by about one-third lower than originally announced

The Top 100 retailer agreed to an amendment that cuts the price to $4.50 per share from the $6.70 per share announced last year. That cuts the price to $179 million from $267 million.

In connection with the amendment, Catterton, through affiliates, provided a $25 million loan to Restoration for working capital that is not contingent on the closing. That subordinated loan “provides the company with substantially enhanced near-term liquidity to operate in the current environment,” the company said.

I wrote a piece on December 10th , 2007 entitled Online Or Brick & Mortar In The 21st Century.  In that post I pointed out that Sears had reportedly made a higher offer than Catterton’s.  Now the offer drops by a third and we find out that $25 Million is needed for working capital.

One thing we pointed out in that December article, as over half of Restoration’s revenues came  from catalog sales,  e-commerce will probably be less profitable than its brick & mortar counterpart.
Imagine selling the business for 25% of revenues.  Seems pretty low to me.

UPDATE: Home goods retailer Restoration Hardware said Friday it will stick with a management-led buyout proposal backed by Catterton Partners, rejecting a bid by Sears Holdings, parent of Sears and Kmart.

Thoughts?  Email me at landfair3554@comcast.net

Posted by Mike Landfair on January 26, 2008 | Comments (0)