UPDATE: Jefferies Downgrades rue21 to Hold Following Announced Takeout For $42 per Share

In a report published on Friday, Jefferies analyst Randal Konik downgraded

from Buy to Hold rating and raised the price target from $40.00 to $42.00 In the report, Jefferies noted, "RUE recently entered into a definitive agreement to be acquired by funds advised by Apax Partners for $42/share (~$1.1B transaction value). The all cash deal represented a 23% premium to the prior day's close and takeout multiples of 21x EPS and 9x EV/EBITDA. The transaction is expected to close before the end of calendar 2013 subject to approval of the majority of stockholders. Over the past year, we have seen increased LBO activity within the sector which we think is likely to continue given the significant cash balances at these companies, little to no debt (ex-leases), and business models with consistent cash generation." rue21 closed on Thursday at $41.99.