Apparel and accessories retailer Ascena Retail Group Inc. Wednesday said it has reached a definitive agreement to acquire Charming Shoppes Inc. in a cash transaction valued at around $890 million. The deal is expected to close during the second calendar quarter of 2012.
Apparel and accessories retailer Ascena Retail Group Inc. Wednesday said it has reached a definitive agreement to acquire Charming Shoppes Inc. in a cash transaction valued at around $890 million. The deal is expected to close during the second calendar quarter of 2012.
The transaction is expected to be neutral or slightly accretive to Ascena’s earnings in the first full year of combined operations and increasingly accretive thereafter.
Ascena has agreed to make a cash tender offer for all outstanding shares of Charming Shoppes at a price of $7.35 per share. The tender offer is expected to begin within 10 business days. The boards of directors of both the companies have unanimously approved the terms of the deal.
Charming Shoppes noted that the consideration represents a premium of 25 percent to the closing market price of its stock on May 1, 2012 and an 89 percent premium to the unaffected share price on November 30, 2011, the day prior to the announcement of its strategic review process.
Pennsylvania-headquartered Charming Shoppes, the parent company of three distinct brands – Lane Bryant, Catherines Plus Sizes and Fashion Bug – was founded in 1940. The company operates over 1,800 retail stores nationwide and store-related e-commerce websites. It also operates Figi’s, a direct marketing business.
Commenting on the deal, David Jaffe, president and CEO of Ascena said, “Charming Shoppes is a superb strategic fit for Ascena. A key component of our growth strategy over the past several years has been to make highly selective and powerful acquisitions.”
Michael Goldstein, chairman of the board of Charming Shoppes stated that the partnering can support future growth and development of the company’s businesses.
Following the completion of the deal, Charming Shoppes will operate as a separate unit of Ascena. Charming Shoppes is currently led by CEO Anthony Romano.
The consummation of the transaction is not subject to financing, Ascena added.
BofA Merrill Lynch is acting as financial advisor and Proskauer Rose LLP as legal advisors for Ascena. Barclays is acting as financial advisor and Drinker Biddle & Reath LLP and Schulte Roth & Zabel LLP as legal advisors to Charming Shoppes.
ASNA closed Tuesday’s regular trading at $19.08 on the Nasdaq. In the pre-market activity on Wednesday, the shares are up 11.3 percent.
CHRS ended on Tuesday at $5.9 and the shares are up 23.56 percent in pre-market.