* IPO $100 mln-$300 mln planned for 1st half 2011-source
* Post-IPO market cap of about $1 billion expected -source
* Bank of America, Goldman to lead underwriters -source
* Shares expected to trade on NYSE -source
(Adds details on U.S. IPO pipeline, performance of private
equity-backed IPOs, Restoration Hardware's private equity
backers and financials)
By Clare Baldwin and Dhanya Skariachan
NEW YORK, Sept 21 Restoration Hardware plans to
raise as much as $300 million in an initial public offering
that would allow its private equity backers to cash in on part
of their investment in the U.S. furniture retailer, a source
familiar with the situation told Reuters.
Bank of America Merrill Lynch and Goldman Sachs would lead
the IPO, which is planned for the first half of next year, the
It is expected to raise between $100 million and $300
million and give Restoration Hardware a market capitalization
of around $1 billion, the source said.
Restoration Hardware sells furniture, bath linens, lighting
fixtures and other items for homes at its retail stores, online
and through catalogs. The IPO plan comes as home goods recover
after the recession.
The shares are expected to trade on the New York Stock
Exchange, the source said.
Four hundred fifty-eight companies have filed to go public
in the U.S. since 2009, according to Thomson Reuters data.
Private equity-owned companies are among the biggest.
Hospital operator HCA Inc hopes to raise up to $4.6 billion
and Toys R Us Inc hopes to raise about $800 million. Nielsen
Holdings BV, best known for viewership ratings which often
determine the fate of TV shows, hopes to raise $2.01 billion.
This year, private equity-backed IPOs debuting in the
United States have posted average losses of 0.7 percent
compared with all IPOs, which have posted average gains of 4.42
percent, according to the data.
Restoration Hardware's plans for an IPO are still
preliminary and could change. The source declined to be named
because preparations for the IPO remain private. Spokespeople
for Bank of America Merrill Lynch and Goldman Sachs declined to
comment. A spokeswoman for Restoration Hardware also declined
Sales at home goods retailers crumbled during the U.S.
recession and housing downturn as consumers tried to save money
by buying fewer things. They are beginning to buy more things
after a long hiatus.
But the economy is recovering in fits and starts and
consumer demand is uncertain. Some industry watchers also worry
that the expiration of a U.S. tax credit for home buyers could
slow recent sales growth.
Private equity firms Catterton Partners and Tower Three
Partners LLC, along with Restoration Hardware Chief Executive
Officer Gary Friedman, bought a controlling equity stake in
Restoration Hardware in a merger agreement approved by
shareholders in June 2008.
Restoration Hardware had agreed in November 2007 to be
taken private for $6.70 per share, or about $267 million, in a
transaction led by Catterton and Friedman, who remains CEO.
Two months later, it reduced the price to $4.50 per share,
valuing the company at roughly $175 million, after market
conditions deteriorated. Sears Holdings Corp (SHLD.O) had also
bid for the company.
At the time of closing, private equity firm Tower Three
Partners LLC made an equity investment in Restoration. This
left Catterton and Tower Three with a controlling stake, the
company said at the time. Tower Three has invested $115 million
in Restoration, according to the firm's website.
Before it was taken private, Restoration Hardware was
publicly traded on the Nasdaq under the ticker symbol "RSTO."
In its last fiscal year before going private, which ended
on Feb. 2, 2008, Restoration lost $51.9 million on net revenue
of $722.2 million. The company had lost money in seven of its
nine latest fiscal years at the time.
Restoration Hardware, with its latest collection including
hand-crafted oak tables and linen-upholstered chairs in neutral
hues, looks to be targeting a higher-end customer.
At the same time, much of chain retailers' sales strength
has come from cutting prices and offering more products.
Pier 1 has been selling more cheaper, decorative items like
end-tables and side-tables rather than bulky couches and
armoires. The store is also offering more kinds of products.
Williams-Sonoma Inc (WSM.N), which operates Pottery Barn
and West Elm, slashed prices on some items despite worries that
the move might tarnish its image as a high-end retailer.
Even furniture retailer Ethan Allen Interiors Inc (ETH.N),
which stuck with full prices throughout most of the downturn,
offered more promotions to avoid losing more market share.
Most of these retailers changed their sales strategies
after Linens 'N Things [LNNHDL.UL], once the No. 2 U.S. home
goods chain, and smaller players like Gottschalks GOTTQ.PK
became casualties of the downturn.
(Reporting by Clare Baldwin, Dhanya Skariachan and Jonathan
Stempel. Editing by Gerald E. McCormick and Robert MacMillan)
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