Linens 'n Things Inc. (LIN) on Tuesday agreed to be acquired in a $1.3 billion deal that will take the struggling home furnishings retailer private.

The company, whose sales and profits have slumped as it tries to fend off stiff competition from discounters and specialty chains, said it agreed to be bought by a company newly formed and controlled by private equity firm Apollo Management LP for $28 per share.

The price represents a 6 percent premium to Monday's New York Stock Exchange closing price of $26.40, but is below a 52-week high of $29.34 touched in mid-September, when takeover speculation arose.

The shares rose 25 cents, or 1 percent, to $26.65 in morning NYSE trading.

The retailer said in September it had hired advisers and was considering a sale. Last month, it reported a 94 percent drop in quarterly profit on weak back-to-school demand.

The company has tried to upgrade its merchandise to compete with discounters such as Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT), which have been expanding their home decor offerings. But the transition to higher-end goods took longer than expected and caused significant disruption.

The deal is expected to close in the first or early second quarter of 2006. Linens 'n Things stock would no longer trade on the NYSE after the deal is completed.

Apollo, which will control the new company on behalf of itself, its managed funds and certain co-investors, has received debt financing commitments from Bear, Stearns & Co. Inc. and UBS Securities LLC.

The debt financing is subject to several conditions, including that comparable store sales for the current fiscal fourth quarter show a decline of no more than 6 percent. In the fiscal third quarter that ended Oct. 1, comparable store sales fell 10.2 percent.

Linens 'n Things operates more than 500 stores in the United States and Canada.