UPDATE: rue21 Enters Into Definitive Agreement to be Acquired by Funds Advised by Apax Partners for $42.00 Per Share in Cash

rue21, inc.

, a leading specialty apparel retailer of girls and guys apparel and accessories, and Apax Partners, a global private equity firm, today announced a definitive agreement under which funds advised by Apax Partners will acquire all outstanding shares of rue21 for $42.00 per share in cash. The transaction is valued at approximately $1.1 billion. The transaction price represents a premium of approximately 23% to yesterday's closing share price and approximately 42% to the 90-day volume weighted average price (VWAP). The rue21 Board of Directors approved the agreement based on the unanimous recommendation of a Special Committee comprised of three independent directors: Bruce Hartman, Arnold Barron and Harlan Kent. The Special Committee is being advised by Perella Weinberg Partners, as financial advisor, and Kirkland & Ellis LLP and Potter Anderson & Corroon LLP, as legal advisors. Two rue21 directors who are partners of Apax recused themselves from Board discussions and the Board vote regarding the transaction. Bob Fisch, rue21's Chairman, President and CEO, also recused himself from the Board vote. As part of the agreement, the Special Committee, with the assistance of its advisors, will conduct an initial 40-day "go-shop" process starting today during which it will actively solicit, evaluate and potentially enter into negotiations with any parties willing to offer a superior acquisition proposal. The go-shop process provides for a low termination fee of 1% (approximately $10 million) to be paid to Apax. rue21 management, including Bob Fisch, has not entered into any arrangements with Apax and is willing to work with any party that emerges through the go-shop process. The SKM II funds, which collectively own approximately 30% of the outstanding shares of rue21, have entered into a support agreement to vote their shares in favor of the transaction with Apax. Pursuant to the terms of the support agreement, if the agreement with Apax is terminated and rue21 enters into a superior transaction, the SKM II funds have agreed to vote their shares in favor of such superior transaction on the same pro rata basis as unaffiliated stockholders. In addition, the transaction with Apax is subject to approval by a majority of the rue21 shares excluding SKM II's shares. The SKM II funds were established in 1998 and the rue21 stake is their last remaining investment. Since 2005, the SKM II funds have been associated with Apax Partners. The SKM II funds were independently advised in this transaction. Bruce Hartman, Chairman of the Special Committee, stated, "This transaction is the result of diligent analysis and thoughtful deliberations by the Special Committee over many months with the assistance of our advisors. This all-cash transaction delivers substantial and certain value, and we believe it is in the best interests of rue21 stockholders. To ensure we are maximizing value for rue21 stockholders, we are also committed to running a comprehensive go-shop process to determine if there are any superior alternatives that may exist to the Apax transaction." John Megrue, Chief Executive Officer of Apax Partners U.S. and Partner in the firm's Retail & Consumer team, said, "We are very proud of the growth that rue21 has achieved. I have worked closely with Bob Fisch to support the Company's growth from less than 100 stores at the time of the initial investment in 1998 to over 900 stores today, and Apax is excited to continue the journey with the Company's senior management team." Bob Fisch, Chairman, President and CEO of rue21, said, "Thanks to the hard work of our associates, rue21 has generated strong top and bottom line growth both as a private company and as a public company. We are proud that a sophisticated investor such as Apax continues to believe in our core strategy and recognizes our value-generating capabilities. This transaction will allow us to focus on achieving our long-term objectives, including growing our business to over 1,700 stores in the U.S. and successfully implementing new initiatives such as e-commerce and rueMan." Preliminary First Quarter 2013 Results rue21 also announced preliminary earnings per share and comparable store sales results for the first quarter ending April 30, 2013. Net sales for the quarter increased 9.1%, while comparable store sales decreased 4.6% from the year-ago quarter. Diluted EPS is expected to be $0.44. Commenting on the results, Fisch said, "This quarter rue21 was impacted by the same challenges that affected the entire industry – unseasonably cool weather, higher payroll taxes and delayed tax refunds. All of these factors affected shopping patterns and resulted in a tougher quarter than we had forecasted in terms of sales growth. Looking ahead we expect both the weather and consumer spending to improve and believe our 2013 strategic initiatives, including opening 125 stores in 2013, will allow us to deliver consistent, strong profit growth to our stakeholders." rue21 will announce full first quarter fiscal 2013 results on June 5, 2013, and host a conference call that day at 4:30 p.m. Eastern Time. The conference call will also be webcast live at www.rue21.com under the Investor Relations section. A replay of this call will be available on the Investor Relations section of the Company's website, www.rue21.com, within two hours of the conclusion of the call and will remain on the website for 90 days. Additional Transaction Details The transaction is expected to close before the end of calendar 2013, subject to approval by the majority of the stockholders unaffiliated with the SKM II funds as well as customary closing conditions. The transaction is not subject to financing. Following completion of the transaction, rue21 will remain headquartered in Warrendale, Pennsylvania. Perella Weinberg Partners is acting as financial advisor to the Special Committee of the rue21 Board of Directors. Kirkland & Ellis LLP and Potter Anderson & Corroon LLP are acting as legal advisors to the Special Committee. J.P. Morgan Securities LLC (lead advisor), BofA Merrill Lynch and Goldman Sachs are providing financial advice to Apax. Committed debt financing for the transaction is being provided by BofA Merrill Lynch, J.P. Morgan and Goldman Sachs. Simpson Thacher & Bartlett LLP and Richards, Layton and Finger, P.A. are acting as legal advisors to Apax Partners. Ropes & Gray LLP is acting as legal advisor to the SKM funds.