Privalia Venta Directa S.L., a Spain-based online private-sale retailer that sells fashion products, said today it had bought Dress for Less, a Germany-based online apparel retailer.

Privalia says it paid at least 88 million euros (US$123 million) for the company, with funding for the acquisition coming from General Atlantic LLC, Highland Capital Partners LLC, Index Ventures LLP and Insight Venture Partners. Privalia bought the German e-commerce firm from Palamon Capital Partners.

Micro Schultis and Holger Hengstler, founders and managing partners of Dress for Less, will become significant shareholders in Privalia, the Spanish company says.

Dress for Less, founded in 1999, has 500,000 active customers in more than 50 countries, Privalia says. The acquisition marks Privalia’s entry into the German market.

Privalia, founded in 2006, has more than 6 million members and had revenue in 2010 of 168.4 million euros (US$235.3 million), a 140% increase from 2009. The company last year expanded its operations to Mexico. Thanks in part to the international e-commerce expansions, Privalia says that it expects to sell 400 million euros (US$558.9 million) worth of merchandise in 2011.

“This acquisition brings a significant geographic expansion, a leadership position in Germany and expands the Privalia business model, providing Privalia with a large and effective channel,” says Lucas Carne, a Privalia co-founder.

Jefferies International Ltd. advised Privalia on the deal.