SAN FRANCISCO, July 29 (Reuters) - Children's Place Retail Stores Inc said it agreed to buy back half the shares its former chairman and chief executive officer owns in the company, and he agreed to withdraw his slate of nominees to the board.

Children's Place "Back to School '09" - Photo: www.childrensplace.com

The company said on Wednesday 29 July it would acquire some 2.45 million shares, or half of the about 4.9 million shares owned by Ezra Dabah. Dabah, together with certain family trusts, owns about 16.6 percent of outstanding common shares in the children's retailer.

Children's Place (PLCE.O), which operates about 900 stores in the United States, said it would pay $28.88 per share, a discount of 5 percent to the average of the closing prices of the three days ending July 28, 2009.

As part of the deal, Dabah and his father-in-law, Stanley Silverstein, will resign from the company's board on the closing of the repurchase, expected on or about August 3, the company said.

And Dabah has agreed to withdraw his slate of three nominees to the board for the annual meeting of stockholders on July 31, according to the company.

The purchase will be about 8 percent to 12 percent accretive to 2009 earnings per share including one-time benefits, the company said. Excluding the benefits, it will be approximately 4 percent to 6 percent accretive.

In 2010, the deal will be about 7 percent to 10 percent accretive to annual earnings.

Children's Place said it would fund the purchase with some $75 million in cash repatriated from company subsidiaries in Hong Kong and Canada. That is expected to result in a non-cash benefit after tax of approximately $4.8 million.

The company also said it would prepay the $38 million balance on its term loan concurrently with the closing of the share repurchase which will result in a one-time charge of $1.6 million before taxes.

Looking to the second quarter, Children's Place said a loss per share from continuing operations would range between 25 cents to 30 cents per share, including a benefit of approximately 18 cents per share for one-time items.

Excluding these items, which include a tax audit settlement, the loss should range between 43 cents per share to 48 cents per share.

In May, Dabah named three nominees for election to the board of the Secaucus, New Jersey-based company. Dabah expressed concern over the company's executive management team and board, and urged the company to appoint a permanent chief executive to replace interim CEO Chuck Crovitz, who has held the top spot for over a year.

Last year, Children's Place weighed a possible sale of the company under pressure from Dabah.

Shares of the company closed at $29.12, down about 2 percent, on the Nasdaq.

(Reporting by Alexandria Sage; editing by Carol Bishopric)