Ascena to Buy Charming Shoppes for $890 Million

Ascena will expand its reach into the plus size market with Charming Shoppes' Lane Bryant stores.

Suffern, NY—Ascena Retail Group, owners of dressbarn, maurices and Justice, announced today that it plans to buy Charming Shoppes, parent of Lane Bryant, for $890 million in cash.

Under terms of the agreement, Ascena has agreed to make a cash tender offer for all outstanding shares of Charming Shoppes common stock at a price of $7.35 a share, a 25% premium to Charming’s closing price on Tuesday.

Ascena is offering shareholders $7.35 for each share of Charming, a 25% premium to the Tuesday closing price for the shares, which haven’t closed above $7 since November 2007.

Founded in 1940 and headquartered in Bensalem, Pennsylvania, Charming Shoppes is a women’s specialty retailer that focuses on the plus-size market. Its three brands Lane Bryant, Catherines Plus Sizes and Fashion Bug operate more than 1,800 retail stores nationwide as well as e-commerce websites. Charming Shoppes also operates Figi’s, a direct marketing business.

‘A Superb Strategic Fit’

Calling Charming Shoppes a “superb strategic fit” that would complement Ascena’s roster of retailers, David Jaffe, Ascena’s president/ceo, said “A key component of our growth strategy over the past several years has been to make highly selective and powerful acquisitions. We’ve built a family of retail brands, each serving a unique customer niche, with a culture that embraces the sharing of resources, new ideas and talented team members. Over the past few years, we have welcomed into our family new brands and new team members while delivering increasing value to shareholders. We believe that Charming Shoppes will be no exception.”

In its most recent first quarter report, Charming Shoppes narrowed its loss to $13.1 million with sales and gross margin down due to deeper promotions at its Lane Bryant stores.

Last December, Charming Shoppes announced a strategic review that included greater emphasis on its Lane Bryant stores and plans to sell off its Fashion Bug division. The company also planned to shutter 90 to 105 stores this year.

The company had also began exploring its possible sale which reportedly attracted interest from several retailers and private equity companies.

Anthony Romano, president/ceo at Charming Shoppes, said his company looks forward to working with Ascena.

“David and his team have an excellent track record of acquiring and seamlessly integrating brands with a strong market niche and growth potential, hallmarks of our Charming Shoppes’ brands,” Romano said. “The Ascena team is comprised of some of the best retail executives in the business, and they have built a world-class specialty retailing organization.”

 

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