WARRENDALE, United States — Rue21 Inc., the operator of more than 900 teen apparel shops, agreed to be bought by private-equity firm Apax Partners in a $1.1 billion deal.

The purchase price of $42 a share will be paid in cash, the companies said today in a statement. That represents a 23 percent premium to Rue21’s closing price in New York yesterday. The deal has been approved by Rue21’s board and the company has 40 days to find a superior offer.

Rue21 has been expanding, with plans to open its 1,000th store by the January and eventually boost its presence to more than 1,700 locations. The chain, based in Warrendale, Pennsylvania, is projected to more than triple its free cash flow this year, according to data compiled by Bloomberg.

“That price is pretty fair,” said Amy Hu Sunderland, a Hong Kong-based analyst at Grandeur Peak Global Advisors LLC, which oversees $950 million and owns shares of Rue21. “They can get a lot of cash flow out of it. These guys are not levered at all, they should be able to get much higher return because they can lever it up.”

Rue21 shares climbed 23 percent to $41.95 at 10:25 a.m. in New York, after earlier reaching $42, for the biggest intraday gain since November 2009. The stock has advanced 20 percent this year through yesterday compared to a 21 percent gain for the Standard & Poor’s SmallCap Consumer Discretionary Index.

Deal Valuation

Apax is paying about 9.2 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That compares with the median of 8.4 in a survey of about 30 comparable deals, the data show.

Funds advised by Apax have invested about $6.3 billion of equity in retail and consumer businesses, with current and previous investments including Tommy Hilfiger Corp. and Calvin Klein Inc.

The SKM II funds, which have been associated with Apax since 2005 and own about 30 percent of Rue21’s outstanding shares, have agreed to vote in favor of the transaction. The deal also will require the approval of investors holding more than half of Rue21’s shares that aren’t owned by those funds, the company said.

The SKM fund was formerly managed by Saunders Karp & Megrue, a middle-market U.S. buyout shop that Apax acquired in 2005. London-based Apax has raised more than $35 billion in committed capital since it was founded in the early 1980s.

The acquisition follows 38 private-equity deals last year for apparel and shoe retailers that reached $5.7 billion, the highest volume since the onset of the U.S. recession in December 2007, data compiled by Bloomberg show.

Rue21, whose stores in regional malls and strip centers compete with low-priced clothing at Wal-Mart Stores Inc. and Target Corp., is the industry’s latest target after the $835 million buyout of True Religion Apparel Inc. earlier this month and the $600 million deal for retailer Hot Topic Inc. in March.

By: Kevin Orland, James Callan; Editors: James Callan, John Lear