SUFFERN, N.Y. (AP) – The Ascena Retail Group is buying Charming Shoppes Inc., owner of Lane Bryant, for about $890 million, giving it access to the large-size women's clothing market.
Charming also runs Fashion Bug, Catherines Plus Sizes and the direct marketing business Figi's. It launched a strategic and financial company review in December.
At that time it said that it hoped to sell its Fashion Bug operations so it could concentrate on Lane Bryant stores, which offer women's clothing in sizes 14 through 28. It did not mention an outright sale of the company at the time, although a strategic review is often corporate jargon for putting a company up for sale.
Ascena, owner of the Dressbarn, Maurices and Justice brands, will pay $7.35 for each Charming share. That is a 25 percent premium to Charming's closing price of $5.90 Tuesday. Ascena's cash tender offer should roll out within 10 business days.
The company said it will use available cash and existing financing commitments to fund the acquisition.
The deal is likely to be neutral or will add a little to earnings in the first full year of combined operations, Ascena said, and should add increasingly to net income totals after that.
The boards of both companies unanimously approved the acquisition. It is expected to close during the second quarter.
Once the transaction closes, Charming will become a subsidiary of Ascena Retail Group Inc.
Charming, based in Bensalem, Pa., runs more than 1,800 stores nationwide. All told, Ascena operates more than 2,500 stores in the U.S., Puerto Rico and Canada. Its Dressbarn and Maurices stores offer clothing for young and older women, while Justice caters to girls ages 7 to 14.
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