Ascena Retail Group Completes Ann Inc Purchase

ascena retail group, inc. on August 21, 2015 announced that it has completed its acquisition of ANN INC. for a combination of cash and ascena stock in an accretive transaction.

With the completion of the merger, ANN INC. shares will be delisted from the NYSE and trading will cease at the close of business on Friday, August 21st. ANN INC. will continue to operate as a wholly-owned subsidiary of ascena.

With the addition of the Ann Taylor, LOFT, and Lou & Grey brands, ascena is now one of North America’s largest and most diversified specialty apparel retailers, with $7.4 billion in trailing twelve month sales, a combined fleet of over 4,900 stores, and over 70,000 associates.

David Jaffe, ascena’s President and Chief Executive Officer, commented: “This powerful merger joins two strong and highly complementary organizations, and dramatically reinforces our leadership position in women’s specialty apparel retailing. The acquisition positions ascena as the third largest specialty apparel retailer and the single largest focused on women’s apparel, with a diverse brand portfolio that serves women of all ages, sizes and demographics.”

Jaffe concluded, “We expect to leverage ascena’s state-of-the-art distribution and fulfillment centers and its shared services capabilities to rapidly and comprehensively integrate the ANN INC. brands, and drive significant value to our stockholders. We have identified $150 million in annualized run rate synergies resulting from this transaction that we expect to capture by the end of the third year post-closing.”

Kay Krill, President and Chief Executive Officer of ANN INC., added, “As we embark on this next chapter in ANN INC.’s history, I am very excited about the opportunities ahead for our brands and our business. Combined with ascena, we have a stronger competitive position and financial base as part of the nation’s largest specialty retailer focused exclusively on women’s apparel. In taking this next step, our focus on our clients remains unchanged. We look forward to continuing to be her go-to wardrobing destination by delivering the same great fashion, the same high level of quality and service, and the seamless shopping experience that are hallmarks of shopping with our brands.”

Excluding transaction and integration expenses, the acquisition is expected to be accretive to EPS within the first year post-closing, accelerating to greater than 20% accretion to EPS thereafter. Additionally, ascena expects the combination to generate significant cash flow, which will enable rapid de-leveraging while supporting planned levels of capital expenditures.

Transaction Details

Under the terms of the transaction, ANN INC. stockholders will receive $37.34 in cash and 0.68 of a share of ascena common stock for each share of ANN INC. common stock. The transaction gives ANN INC. an enterprise value of approximately $2.0 billion.

ascena financed the cash portion of the acquisition through a $1.8 billion senior secured term loan it placed on July 29, 2015.

Guggenheim Securities and Goldman, Sachs & Co. acted as financial advisors to ascena. Proskauer Rose LLP acted as legal counsel to ascena in connection with the transaction. J.P. Morgan Securities LLC acted as the exclusive financial advisor to ANN INC. in connection with its strategic review process and the transaction. Wachtell, Lipton, Rosen & Katz acted as legal counsel to ANN INC. in connection with the strategic review process and the transaction.

Ascena Aquires Ann Inc

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