Pillow Talk

Linens 'n Things Inc. (Clifton, N.J.) has agreed to be acquired by a private equity firm and its partners for $1.3 billion. The group, to be formed by Apollo Advisors L.P. (Purchase, N.Y.) and its investors, intends to take the second-largest home-goods chain in the U.S. private.

The deal, however, requires that the company meets certain sales and profits goals to obtain financing. The company must have full-year earnings (before interest, taxes, depreciation and amortization) of not less than $140 million. And its same-store sales for the current quarter must drop no more than 6 percent.

Despite its 515 superstores (35,000 square feet and larger) in 45 states and five Canadian provinces, its sales have slumped in the face of competition from its Number One specialty competitor, Bed Bath & Beyond (Union, N.J.), and discounters like Wal-Mart Stores (Bentonville, Ark.) and Target Stores (Minneapolis).