Is it Party Time for Leonard Green?

Private equity firm Leonard Green & Partners is considering a $2 billion deal to acquire Party City Holdings, the leading North American retailer of party goods and Halloween costumes, Reuters reported. The private equity firm was recently reported to be nearing completion on a $6 billion fund.


(Reuters) – Private equity firm Leonard Green & Partners LP is weighing a roughly $2 billion buyout of Party City Holdings Inc, North America’s largest retailer of party goods such as balloons and Halloween costumes, according to people familiar with the matter.
Party City, co-owned by buyout firms Advent International Corp, Berkshire Partners LLC and Weston Presidio, has been exploring a sale after filing for an initial public offering a year ago that it may still pursue, the sources said.
Several private equity firms expressed interest in acquiring Party City but then dropped out, the sources said. Leonard Green is still in talks for a potential acquisition and it is unclear who else remains in the process, they added.
Goldman Sachs Group and Deutsche Bank, who are part of the IPO underwriters, are also advising Party City on a potential sale, the sources said.
There is no guarantee whether the exploration will lead to a deal, and Party City could still opt for an IPO instead, the sources said.
Representatives for Party City, Leonard Green and Goldman Sachs declined to comment. Deutsche Bank was not immediately available for comment.
Party City’s owners have asked for 10 times Party City’s earnings before interest, tax, depreciation and amortization (EBITDA), valuing the company at more than $2 billion, said three of the sources. Staple financing was being made available at 6 times EBITDA, they added.
Berkshire Partners and Weston Presidio acquired the company in 2004, and Advent International invested in the firm four years later. The buyout firms together control 91 percent of the company.
Party City’s revenues rose 58 percent to roughly $1.6 billion in 2010 from 2006, while its adjusted EBITDA surged 85 percent to $226 million during the same period.
Party City sells party supplies, decorations and costumes for a variety of party occasions and holidays, principally under the brands Party City, Halloween City, Factory Card & Party Outlet, and Party Packagers.
(Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by David Gregorio)