Ascena Retail Group and Ann Inc entered into a definitive merger agreement under which Ascena will acquire Ann Inc for a combination of cash and stock in an accretive transaction.
Upon closing, Ann Inc stockholders will receive $37.34 in cash and 0.68 of a share of Ascena common stock in exchange for each share of Ann Inc common stock.
“Based upon the closing price of the Ascena stock on May 15, 2015, this implies a price per share of $47.00, a 21.4 per cent premium over the closing price of Ann the same day,” Ascena Retail said in a press release.
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, subject to customary closing conditions.
These include among other things, expiration or early termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976.
It also includes approval of the merger by the holders of a majority of the outstanding shares of Ann Inc. However, the transaction does not require approval by Ascena stockholders.
Ascena’s CEO David Jaffe said, "This transaction joins two highly complementary companies and management teams and dramatically reinforces our leadership position in women's specialty apparel retailing.”
“We are excited to further leverage our uniquely capable operating platform and exceptional combined talent to drive immediate, significant and ongoing value for our stockholders,” he added.
“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,” Jaffe noted.
Ascena said it has identified $150 million in annualised run rate synergies in the combination that it expects to generate over a three-year period.
The transaction aligns seamlessly with Ascena's platform strategy and shared services model, designed to enable an effective, rapid and comprehensive back office integration process.
Additionally, Ascena expects the combination to generate significant cash flow while both maintaining appropriate levels of capital expenditures and enabling rapid deleveraging.
Ann Inc CEO Kay Krill said, “The transaction will make us part of a larger organisation with a diversified portfolio of brands focused on women's apparel market, a strong operating platform and a powerful financial base.”
“As a member of the Ascena family, Ann Inc will be poised to further enhance and grow our business as we continue to take steps to better strategically and operationally position our brands,” Krill too added.
Ascena intends to finance the acquisition through bank debt and Goldman, Sachs & Co. and Guggenheim Securities have arranged committed financing for the transaction.
