Acquisition in the American apparel sector

Acquisition in the American apparel sector

With both appraisals of the respective boards of directors the American Ascena Retail Group Inc. (apparel for women and tween girls with brands dressbarn, maurices and Justice) is proposing in a tender offer to acquire Charming Shoppes Inc. (fashion for plus-size women and brands Lane Bryant, Fashion Bug, Catherines) for USD 890 million or USD 7.35 for each share

Ascena owns over 2500 stores in The U.S., Puerto Rico and Canada under the three above mentioned brands and it had acquired Tween Brands in 2009 for USD 157 million in a stock-swap-deal thus opening up the Tween girls’ market for Ascena. Dressbarn (836 stores in 48 US states) sells casual, career and special occasion fashion and accessories for women (age 35 to 55). Maurices (810 stores in 444 states and Canada) offers casual and career apparel and accessories to the fashion-conscious woman 17 to 34 years, and with a 20-something attitude. Justice (920 stores in 46 states, Puerto Rico and Canada) provides trendy apparel and accessories for tween girls (7 to 14 years). Sales amounted in the fiscal year (per end of June) to USD 2.9 billion (+23 %).

The acquisition of Charming’s century old Lane Bryant (mostly located in malls, strip and outlet centres, women 35-55) caters to plus size women with American sizes of 14 to 28 whereas Catherines brand offers the extended size market for women 45+ who are larger than plus size, wearing sizes ox to 5X. Charming operates 1832 stores in 48 states and has over 23000 full and part time employees. Its brand Fashion Bug (women 30-50) has been a drain on Charming’s business (question of inventory management) and Ascena has not yet decided on the future of this brand. Charming operates the Figi’s family of brands, including holiday food and gifts catalogue Figi’s Gifts in Good Taste®, the home and gifts catalogue Figi’s®Gallery and its wholesale unit Figi’s Business Services. Charming’s total sales in the fiscal year of 2011 (per January 28,2012) amounted to USD 1992.4 (USD 2061.8) million thereof Lane Bryant (including Outlet) contributed USD 991.8 (USD 977.9) million, Fashion Bug USD 581.6 (USD 668.7) million and Catherines USD 297.7 (USD 300.0) million. The company has been implementing turnaround measures under its newly promoted COO to CEO, Anthony Romano and these created immediately interest for takeover activities of various parties and it entered serious talks with Ascena in January of this year. Ascena sees in the acquisition the access to the ever more important market of larger sizes and thus as a logical strategic fit.

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