Ascena Retail Group To Buy Ann In $2 Bln Deal

(RTTNews) - Ascena Retail Group Inc. (ASNA) has agreed to buy women's apparel retailer Ann, Inc. (ANN) for an enterprise value of $2.0 billion, the two companies said Monday. The deal will create a combined company, with sales of more than $7.3 billion and operating more than 4,900 stores, exclusively focused on women's retailing.

New York-based Ann is the parent company of Ann Taylor and Loft, two women's specialty retail fashion brands in North America. Ann has been under pressure from investors to explore strategic alternatives, including sale of the company, to maximize shareholder value.

New Jersey-based Ascena offers clothing, shoes, and accessories for women under the Lane Bryant, Cacique, maurices, dressbarn and Catherines brands; and for tween girls under the Justice brand. Through its subsidiaries, the company operates about 3,900 stores throughout the U.S. and Canada.

Under the terms of the deal, Ann shareholders will receive $37.34 in cash and 0.68 of a share of Ascena common stock for each share of Ann common stock held by them.

This implies a merger price of $47.00 per share, representing a 21.4 percent premium over Ann's closing stock price of $38.71 on Friday, May 15, 2015. At closing, Ann stockholders will own about 16 percent of Ascena.

The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close in the second half of 2015. The transaction requires approval by holders of a majority of the outstanding shares of Ann, but does not require approval by Ascena stockholders.

Ascena intends to finance the acquisition through bank debt. Goldman, Sachs & Co. and Guggenheim Securities have arranged committed financing for the transaction.

Ascena said it has identified $150 million in annualized run rate synergies in the combination that it expects to generate over a three-year period.

Excluding transaction and integration expenses, Ascena expects the acquisition to be significantly accretive to its earnings per share in the first year post closing and to boost earnings per share by more than 20 percent thereafter.

ANN closed Friday's trading at $38.71. In Monday's pre-market activity, the stock is adding $8.52 or 22.01 percent to $47.23.

ASNA closed Friday's trading at $14.21. In pre-market trades, the stock is up $1.30 or 9.15 percent to $15.50.