Bloomberg News

Thomas H. Lee Said to Be in Lead to Buy Party City

June 01, 2012

Thomas H. Lee Partners LP is in the lead to buy Party City Corp., the closely held retailer of party supplies that filed for an initial public offering in April, said two people with knowledge of the talks.

A deal may be reached in the coming days, said the people, who declined to be identified because the talks are private. An agreement has yet to be reached and talks could break down, the people said. Other bidders remain interested in the Elmsford, New York-based company, and it could still go to another buyer, said one person.

Party City in April filed (PRTY:US) to raise as much as $350 million in an IPO that it hasn’t completed. Global demand for new equity has since collapsed. World stock markets have lost about $4 trillion since the start of May, pulled down by speculation that Greece may exit from the euro. Investors have also become skittish about valuations as Facebook Inc. (FB:US) tumbled 22 percent from its IPO price.

At least 13 IPOs have been withdrawn or postponed globally since Facebook’s May 17 offering, slowing a market for deals that’s struggled to keep momentum as U.S. stock values have failed to recover to levels before the financial crisis.

Party City is owned by investors including Advent International Corp., Berkshire Partners LLC and Weston Presidio, who together hold 91 percent of its shares. It posted net income of $76.3 million last year on $1.87 billion in revenue, according to a prospectus filed on May 10. Party City had $982.3 million of debt as of Dec 31.

Franchised Stores

The company was founded in 1947 as a wholesale party supplier. It has about 1,200 owned and franchised stores in the U.S. and Canada and about 400 temporary Halloween stores, along with a wholesale business.

Thomas H. Lee, the Boston-based private-equity firm, manages $14 billion in assets and has stakes in companies including Dunkin Brands Inc. (DNKN:US), Clear Channel Communications Inc. and Nielsen Holdings NV. (NLSN:US) An agreement to buy Party City would represent Lee’s fourth deal this year. That includes an announcement this week that it would buy restaurant chain Fogo de Chao Churrascaria LLC.

A spokesman for Lee declined to comment yesterday and a spokeswoman for Party City didn’t immediately return a call seeking comment.

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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