Eddie Bauer Holdings to be Acquired by Private Equity Groups

Eddie Bauer Holdings, Inc. and Eddie B Holding Corp., a company owned by affiliates of Sun Capital Partners, Inc. and Golden Gate Capital, today announced that they have entered into a definitive agreement under which Eddie B Holding Corp. has agreed to acquire Eddie Bauer for $9.25 per share in cash. The per share consideration represents an approximate 12% premium to the prior four weeks' average closing price of Eddie Bauer's common stock.

The total transaction value is approximately $614 million, including debt to be repaid of approximately $328 million, as of September 30, 2006. The sale is the culmination of an exploration of strategic alternatives initiated by Eddie Bauer in May 2006.

Fabian Mansson, Chief Executive Officer of Eddie Bauer, commented, “Following a comprehensive review process, our Board of Directors has unanimously determined that the transaction announced today is in the best interests of our Company and its stockholders. We believe that the transaction will provide Eddie Bauer with new resources and the time necessary to execute our turnaround strategy. We look forward to partnering with Sun Capital and Golden Gate, who bring extensive experience in the retail and catalog sectors, to take our Company to the next level and to capitalize on the potential of the Eddie Bauer brand.”

Gary Talarico, Managing Director of Sun Capital Partners, Inc., added, “We are pleased to join with Golden Gate Capital in signing this definitive agreement to acquire one of the best known brands in the apparel industry. We are particularly excited about the combination of the considerable experience of our respective firms in retailing, apparel and direct marketing and look forward to working with the management of Eddie Bauer to continue the success and growth of the brand.”

“We are very pleased to have reached an agreement with the Eddie Bauer Board of Directors, and we look forward to working with the Company to continue to serve its customers with outstanding products consistent with the Eddie Bauer heritage,” said Stefan Kaluzny, a Managing Director at Golden Gate Capital.

Among Sun Capital's current affiliated portfolio companies are Mervyn's, Shopko Stores, Lillian Vernon, Marsh Supermarkets, Anchor Blue Retail Group, Dim Branded Apparel, and Most. Among Golden Gate Capital's current investments is Catalog Holdings, a $1.1 billion revenue direct marketer of women's apparel whose brands include Spiegel, Newport News, Appleseed's, Norm Thompson, Drapers and Damons, Venus, and Haband, among other titles. Other consumer products investments include Herbalife, Eye Care Centers of America, Neways, and Leiner Health Products.

The transaction, which is anticipated to close in the first quarter of 2007, is subject to the approval of Eddie Bauer stockholders and other customary closing conditions, including Hart-Scott-Rodino antitrust review. The transaction is not subject to a financing condition.

The Board of Directors of Eddie Bauer has unanimously approved the merger agreement and recommends that Eddie Bauer's stockholders vote to approve the agreement. The Company expects to file its preliminary proxy statement with respect to the transaction within ten days. A Form 8-K with a copy of the merger agreement will be filed with the Securities and Exchange Commission later today.

Goldman Sachs & Co. served as Eddie Bauer's financial advisor in connection with the transaction and Goldman Sachs & Co. and William Blair & Company each rendered separate fairness opinions to the Eddie Bauer Board of Directors as to the fairness, from a financial point of view, of the consideration to be received by Eddie Bauer's stockholders in the merger.