The company has been struggling with slower sales and has posted several years of losses. It sells products through a chain of 112 stores, a catalog and an online business.
HGI Funding LLC, a subsidiary of Harbinger Group Inc., and some of the retailer's shareholders who collectively own 89 percent of the company's stock are offering to buy out the remaining shareholders for 27 cents per share.
That's a 50 percent premium to the company's closing price on Sept. 27, the last day of trading before the intent to buy the company was made public. This is up from an earlier offer of 23 cents per share.
The deal values the entire company at about $10.6 million, based on the 39.3 million shares that FactSet says it has outstanding.
Frederick's of Hollywood said the deal is in the best interest of shareholders and it has been approved by its board. It still needs shareholder approval to move forward.
If the deal is completed, the company said Thomas Lynch will continue to serve as CEO for the company for three years following.
Shares jumped 6 cents to 26 cents in the late afternoon Thursday. The volatile stock is down 9 percent for the year as of Wednesday's close.