* Advent Int'l to pay $17.50 per Charlotte share
* Price represents 27 pct premium to Friday's close
* Charlotte stock up 26 pct
(Adds background, analyst's comments)
By Mihir Dalal
BANGALORE, Aug 24 (Reuters) - Women's-apparel retailer Charlotte Russe Holdings Inc CHIC.O said it has agreed to be acquired by private equity firm Advent International Corp for about $380 million in cash, sending its shares up 26 percent.
Advent International will pay $17.50 per Charlotte share in a tender offer, representing a premium of 27 percent to the stock's Friday's close.
"It's a highly compelling offer and we do think that it is an offer that will likely be completed," Wedbush Morgan analyst Betty Chen said.
She said that though Charlotte Russe had been posting better-than-expected earnings in the past couple of quarters, its revenue was still disappointing.
"Even though Charlotte Russe has improved its products and become strong operationally by cutting costs, it is difficult for retailers to grow topline in this environment... Their board felt the more appropriate thing to do was to lock in this gain for their shareholders," Chen said.
Advent International's offer is nearly double the price of a buy-out offer Charlotte Russe had received in November, when KarpReilly Capital Partners LP, a shareholder, had offered to buy it for $198.6 million. The offer was later withdrawn after the company denied the shareholder's request for access to due diligence material.
Chen said that though Advent International's offer was a substantial premium to Charlotte's Friday's close, the stock trades at a heavy discount on an EBITDA (earnings before interest, tax, depreciation and amortization) basis compared with its sector.
"The final purchase price is only 4.5 times EBITDA, which is still a pretty good discount to where specialty retailers' acquisitions typically occur. So for Advent, too, this was a compelling deal," the analyst said.
She said Advent had a very strong portfolio of consumer companies, and a good track record of working with retailers.
"It appears that they also have a relationship with Jenny Ming, who used to be the president of Old Navy. So they have a lot of talent who can help with the turnaround at Charlotte Russe," Chen said.
Shares of San Diego-based Charlotte Russe have more than doubled since it announced in March that it had asked its financial adviser to initiate a sale of the company as part of its review of strategic alternatives.
In January, Charlotte Russe had said it was evaluating a number of strategic alternatives, including a possible sale of the company.
The tender offer is expected to start on or before Aug. 31, and expire after 20 business days, Charlotte Russe said in a statement.
Cowen & Company has been acting as financial adviser to Charlotte Russe in its strategic review process, while Moelis & Co is advising Advent International.
Charlotte Russe's shares were up $3.59 at $17.38 Monday morning on Nasdaq. (Reporting by Mihir Dalal in Bangalore; Editing by Unnikrishnan Nair)