Business

Rue21 sale just down the street

Apax Partners, as early as Thursday, is expected to close its controversial $1.1 billion acquisition of teen retailer Rue21.

The private-equity firm run by John Megrue is buying Rue21 from Megrue’s former firm, Saunders Karp & Megrue, putting him on both sides of the transaction.

On top of that potential conflict of interest, Rue21’s net income has been plunging since the deal was announcement.

Yet a member of the Apax Fund Advisory Committee, which consists of the lead backers, tells The Post investors haven’t pressured Apax to get out of the deal.

“Would you want to see an end to cross-investing in a perfect environment?” the source asked. “Absolutely.”

But he said he is “fairly satisfied” the deal was handled correctly — as Apax was open about the potential conflicts at its May Advisory Committee meeting.

Plus, Megrue has recused himself from any action regarding the deal.

With the profits slide, Apax believes it is now paying an 11 times EBITDA multiple for Rue21, whereas it was about an eight-times multiple at the time the deal was signed.

Apax declined comment. Rue21 did not return calls.