An Ann Taylor in New Orleans, Louisiana.
Photograph by Josh Brasted — Getty Images

It's a $2.1 billion cash-and-stock deal

By John Kell
May 18, 2015

Women’s retailer Ann Inc. has agreed to a $2.1 billion takeover bid by Ascena Retail Group, which is adding over 1,000 stores and more than $2.5 billion in annual sales to the larger company’s portfolio.

The cash-and-stock deal values Ann ANN at $47 per share, with shareholders set to receive $37.34 in cash for each share and the rest in Ascena stock. The deal implies a $47 per share price based on Ascena’s closing price on Friday. After the acquisition, which is expected to close in the second half of this year, Ann shareholders will own about 16% of the combined company.

The Ann acquisition comes at an interesting time for the women’s apparel business. Many players in the sector of retail that caters to older women have found themselves out of fashion with their target audience, and millennials have shunned the sector altogether.

The Ascena offer is a 21% premium to Ann’s closing price on Friday and above any level the stock has ever traded at. The board of directors at both companies have approved the acquisition.

“With the addition of the Ann Taylor and LOFT brands, Ascena will become one of North America’s largest and most diversified specialty apparel retailers, with a tremendous set of opportunities to continue to expand its leadership position in the women’s apparel market,” said Ascena President and CEO David Jaffe in a statement.

The deal will add the Ann Taylor and LOFT brands to Ascena Retail’s ASNA fleet of stores, already operating about 3,900 stores under the Lane Bryant, dressbarn, Catherines and Justice brands with annual revenue of nearly $4.8 billion. Ann is far smaller, generating consistent sales growth in recent years though profitability was lower in the latest fiscal year. Ascena said the deal will add to earnings and generate “significant cash flow.”

Because women’s apparel-focused retailers and brands have struggled, merger-and-acquisition action has heated up. As a result, competitors in the space have struggled, resulting in acquisitions to private-equity firms or falling into bankruptcy. Coldwater Creek, which landed into bankruptcy, sold its intellectual property to Sycamore Partners while Talbots was also acquired by the private-equity firm in a separate transaction that only amounted to $369 million including debt. Many have speculated that Chico’s CHS could be on the block, while J. Jill was acquired for a reported $400 million by TowerBrook Capital Partners LP earlier this year.

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