Private Equity Firms Agree to Buy Party City

Private-equity firms Berkshire Partners and Weston Presidio said Tuesday that they had agreed to acquire retailer Party City Corp. for about $360 million in cash.

The two firms, which also are the principal owners of party-supplies manufacturing company Amscan Holdings Inc., will pay $17.50 a share for Party City -- a premium of 42.5% over the stock’s Monday closing price of $12.28.

Shares of Rockaway, N.J.-based Party City soared $4.60, or 37%, to $16.88.

The company, which announced in March that it had put itself up for sale, said its board had unanimously approved the deal and expects it to close by early 2006. The acquisition is subject to debt financing as well as approval by Party City shareholders and regulators.

“The party retailing industry is a durable and growing business with tremendous potential,” said Robert Small, managing director at Berkshire Partners.

In matching up the operations of Party City with those of Amscan, the deal stands to create a more dominant player in the party-goods niche. With 249 company-owned stores and 250 franchise locations, Party City reported revenue of about $500 million for the fiscal year ended July 2.