Ann Taylor and Loft sold for $2.16bn as Lane Bryant owner goes shopping

http://www.theguardian.com/business/2015/may/18/lane-bryant-owner-buys-ann-taylor-loft

Version 0 of 1.

Dressbarn is adding to its wardrobe. . Ascena retail group, owner of the womenswear chain, is buying Ann, parent company of the Ann Taylor and Loft brands. The cash-and-stock deal is valued at about $2.16bn, the company said on Monday.

Ascena has its roots in a single Dressbarn store that opened in Connecticut in 1962. That store zeroed in on an underrepresented group of consumers: working women. The new merger caters to the same, growing demographic: at 72 million, women currently account for 47% of America’s workforce.

Ann Taylor will join a family of brands including Lane Bryant, Dressbarn and Maurices.

The announcement came four days before Ann was scheduled to release its first-quarter results. In March, the company announced it was planning to grow its new, more casual brand, Lou & Grey, by opening more stores and launching its own website. In 2014 the company’s sales decreased by 1.9% – with the Ann Taylor brand seeing a 2.2% dip and the Loft brand a fall of 1.7%.

Ascena and Ann value the deal at approximately $2bn. Ann shareholders will receive $37.34 in cash and 0.68 of a share of Ascena stock in exchange for each of their shares. The companies put the total price at $47 per share. Ann shareholders will own about 16% of Ascena once the transaction closes.

Ann shares went up 21.8% in premarket trading on Monday, after the merger was announced.

“Our stockholders will receive approximately 80% of the purchase price in cash, providing immediate and certain value, and also have the opportunity to participate in the upside of the combined company as a result of the stock portion of the purchase price,” Ronald Hovsepian, non-executive chairman of Ann’s board of directors, said in a statement.

The buyout was unanimously approved by the boards of both companies.

“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 positions in the women’s apparel market,” David Jaffe, Ascena’s president and chief executive, said in a statement.

This will be Ascena’s fourth acquisition in 10 years. In January 2005, the retailer acquired Maurices, which serves women aged between 20 and 35. Prior to that, Ascena – formerly Dressbarn – catered to women aged between 35 and 55.

In November 2009, Ascena acquired Justice, an apparel and accessories brand for “tween” girls aged between seven and 14. The 2012 acquisition of Charming Shoppes brought in brands such as Lane Bryant and Catherine Plus and helped Ascena break into plus-size apparel market.

In a conference call announcing the merger, Ascena described Ann Taylor as a strong fit. The latest acquisition is in line with the company’s direction to cater to more mature consumers. Ann Taylor and Loft cater to slightly more affluent consumers than Ascena’s other brands.

The merger is expected in the second half of 2015. The company will have more than 4,900 stores in North America, which will employ more than 70,000 associates, 98% of whom are women.

Associated Press contributed to this report.