Varsity Brands, Inc. has signed a definitive merger agreement to be acquired by Varsity’s Senior Management and a wholly-owned subsidiary of an affiliate of Leonard Green & Partners, L.P.

The company entered into the merger agreement following the unanimous recommendation of the members of Varsity’s board of directors voting on the transaction. Under the terms of the agreement, Varsity’s stockholders will receive $6.57 per share in cash upon the closing of the merger. The purchase price represents a 39.8% premium over yesterday’s closing price of $4.70 and a 43.7% premium over the average closing price of Varsity’s common stock for the last twenty (20) trading days. The aggregate value of the merger transaction is approximately $130.9 million, including the repayment of indebtedness. Rothschild Inc., Varsity’s exclusive financial advisor in connection with the proposed transaction, rendered an opinion to Varsity’s board of directors, subject to the qualifications stated therein and as of the date thereof, to the effect that the consideration to be received in the merger by the holders of Varsity’s common stock (other than the acquiror, members of Varsity’s management who will exchange a portion of their equity holdings in Varsity for equity in the surviving company and their respective affiliates) was fair, from a financial point of view, to such holders.

Jeffrey G. Webb, Varsity’s founder and current chief executive officer, will continue as chief executive officer following the merger. Mr. Webb and other members of management will exchange a portion of their equity holdings in Varsity for equity in the surviving company. The balance of management’s equity holdings in Varsity will be acquired or canceled for the same consideration that all of Varsity’s other equity holders are receiving for their equity interests in the merger.

Jeffrey G. Webb stated, “We are delighted to enter into the merger agreement with Leonard Green & Partners. We believe that the transaction brings significant value to our stockholders and enables Varsity to continue to build upon its leadership position in the school spirit industry.”

Jonathan D. Sokoloff, managing partner of Leonard Green & Partners, said, “We look forward to our partnership with Varsity and its management team led by Jeff Webb. Leonard Green & Partners is committed to providing the capital necessary to grow Varsity’s cheerleading, dance and soccer operations while continuing to provide quality service to its customers.”

Mr. Webb, together with certain other members of management and certain members of the board of directors, who collectively own approximately 47% of the outstanding shares of the Company’s common stock, have agreed to vote their shares in favor of the merger.

The closing of the transaction is subject to certain terms and conditions customary for transactions of this type, including receipt of stockholder approval and anti-trust clearance. The closing of the transaction is also subject to the successful completion of a tender offer for the company’s outstanding 10.5% senior notes due 2007. The closing of the transaction is not subject to financing. Leonard Green & Partners through an affiliated equity fund has fully committed the debt and equity financing necessary to consummate the merger.

Stockholder approval will be solicited by the Company by means of a proxy statement, which will be mailed to stockholders upon the completion of the required Securities and Exchange Commission filing and review process. Simultaneously, the Company will make a tender offer for the Company’s outstanding 10.5% senior notes which will be conditioned upon, and effected simultaneously with, the closing of the merger transaction. The parties currently anticipate consummating the transaction in the third calendar quarter of this year.