UPDATE 1-Restoration Hardware agrees to $267 mln buyout

(Adds stock move and background on transaction, company, and Catterton Partners)

NEW YORK, Nov 8 (Reuters) - Specialty retailer Restoration Hardware Inc RSTO.O said on Thursday it agreed to a management-led buyout worth $267 million in a deal that includes private equity firm Catterton Partners.

Under terms of the agreement, Restoration Hardware's outstanding shares would be acquired for $6.70 in cash per share, or a 150 percent premium to Restoration's closing price on Wednesday, the company said.

Its stock rose $3.75, or 140 percent, to $6.42 on the news. The premium offered by the buyout group is much larger than the 20 percent to 25 percent premium typical of takeovers.

Restoration Hardware Chief Executive Gary Friedman will participate in the deal, the company said. Several institutional investors have also agreed to invest in the transaction or exchange their common stock for equity of the purchaser or an affiliate.

The deal is expected to close in the first quarter of 2008, the company said.

California-based Restoration Hardware is a specialty retailer of home furnishings and bathware.

Buyouts that involve a top executive or group of executives are typically called management-led buyouts, though a private equity investor or another partner could be the ones actually leading the transaction.

A committee of independent directors, with the assistance of its advisers, will solicit proposals from third parties for a period of 35 days ending Dec. 13, the company said.