iParty’s over as Dedham chain sells to N.J. rival

iParty's over as Dedham chain sells to N.J. rival

Dedham's iParty finally has something to celebrate.

Larger competitor Party City has a deal to buy the struggling party goods chain, which in November announced it had hired a financial adviser to explore strategic alternatives. The cash deal, valued at about $10.9 million for common stockholders, represents a 200 percent premium over iParty's Feb. 28 closing share price.

Party City is getting iParty "very cheap," said retail consultant Michael Tesler, of Norwell's Retail Concepts, but it's good news for iParty's landlords and vendors.

"IParty may have been struggling paying its bills and may be in arrears in some of these situations," Tesler said. "In a bankruptcy case, the landlords would get killed. It would be worse for vendors."

In regulatory documents, iParty said the total transaction has an expected "enterprise value" — a measure of what the market believes a company's ongoing operations are worth — of about $35 million, excluding deal expenses.

Rockaway, N.J.-based Party City is the nation's largest party supply retailer with 750 stores, while iParty has 54 stores in New England and Florida.

"Party City is a leading player in our industry, and we could not be more pleased with this outcome of the strategic review we initiated last year and the return it affords to all of our stockholders" said iParty chief Sal Perisano.

In October, iParty took a devastating blow from Hurricane Sandy — the second straight year that a major storm disrupted its crucial Halloween seasonal sales period.

Party City CEO Gerald Rittenberg said the acquisition will accelerate the chain's growth in New England, where it has just five Connecticut stores. "We look forward to working together to expand our combined geographic footprint and brand presence on a national scale," he said.

The deal, expected to close in the second quarter, allows iParty to solicit superior proposals through March 31.

Boston private equity firm Thomas H. Lee Partners bought a majority stake in Party City last June.

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