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HAWTHORNE, NJ-Rag Shops Inc., which operates a chain of 69 specialty fabrics and crafts shops in five states, was acquired by an affiliate of Sun Capital Partners. The Boca Raton, FL-based private investment firm is paying $4.30 per outstanding common share to buy nearly 2.7 million such shares, amounting to 56% of all issued and outstanding shares. The per-share price also amounts to a 23% premium over the closing price immediately prior to the announcement of the sale.

“Rag Shops existing management team is well equipped to strengthen the Company’s market position and to take advantage of new opportunities,” says Michael Fieldstone, a Vice President with Sun Capital, in a statement. The transaction follows the announcement by Rag Shops’ management, earlier this year, that the company had retained the investment and banking firm of SunTrust Robinson Humphrey to provide financial advisory services and to review possible strategic alternatives, including a sale, merger or other corporate restructuring.

As part of the deal, founders Stanley Berenzweig and Doris Berenzweig have resigned immediately as chairman/CEO and secretary, respectively. Jeffrey Gerstel has been named as the company’s president and COO, and other top management people will take over other responsibilities relinquished by the Berenzweigs.

Sun Capital Partners has invested in more than 70 companies, with revenues totaling about $18 billion, since it was founded in 1995. Earlier this year the firm, and two other parties, bought the Mervyn’s discount department store chain from Target Corp. for $1.7 billion. Sun Capital has also invested in other retailers, such as Furniture Warehouse and Sam Goody.

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