Ascena Retail Group Inc., which owns Dressbarn and several other apparel chains, said Wednesday that it was buying Lane Bryant, Fashion Bug, and the other holdings of Bensalem-based Charming Shoppes Inc. in an $890 million deal that would create one of the nation's largest specialty retail corporations.
In a joint call with investors, executives of Charming Shoppes and Suffern, N.Y.-based Ascena, both publicly traded companies, did not say how many jobs might be eliminated as a result of the proposed sale, which is expected to close by June and will result in a company with about 4,400 stores employing 54,000 associates nationwide and in Canada.
Charming Shoppes employed 23,000 associates at the end of its last fiscal year.
Overall corporate and administrative functions for Charming Shoppes would remain in Bensalem, while Lane Bryant's home office would continue to operate in Columbus, Ohio, said Ascena president and chief executive David Jaffe. Officials said they were eager to integrate the companies' "shared services" to improve profit and eliminate redundancies, with Jaffe promising greater detail by the fall.
Ascena is offering $7.35 a share to Charming Shoppes stockholders, a 25 percent premium over its Tuesday closing price. A tender offer in the next 10 days would get the ball rolling.
Ascena shares closed up 10.4 percent Wednesday, at $21.06. Charming Shoppes closed at $7.31, up 23.9 percent.
Jaffe said he would collaborate with Charming Shoppes president and CEO Anthony M. Romano over how to meld the companies into what will amount to seven managed retail businesses owned by a single corporation.
"We'll work with Tony and his team to make smart choices regarding streamlining operations," Jaffe said.
Charming Shoppes had hoped to sell off its Fashion Bug chain; it announced in December that it had hired a firm to explore strategic options and specifically divest it. Because that did not happen, Jaffe said, Ascena officials would study Fashion Bug before deciding its fate.
When asked whether Ascena would consider keeping Fashion Bug in operation with the hope of turning it around, Jaffe replied: "All options are on the table."
Acquisition of plus-size chains Lane Bryant and Catherines, leaders in the apparel category aimed at more than half of all U.S. women, gives Ascena access to a market not targeted by its Dressbarn, Maurices, and Justice brands.
Research by NPD Group places the market for plus-size apparel at $17.4 billion, the Charming Shoppes CEO told analysts.
"We also like to look at it by women who wear size 14 or larger," Romano explained. "The market grows to $29 billion when you consider all American women wearing size 14 and larger."
The proposed acquisition will be financed by cash and $475 million of debt. It comes after several years of regrouping at Charming Shoppes, which lost longtime CEO Dorrit Bern in mid-2008 in a heated proxy battle waged by activist investors.
Since then, Charming Shoppes has closed stores and sold noncore assets to stem a profit and sales slide. It also has been shifting locations from shopping malls into outdoor shopping centers, where rents are generally lower.
Contact staff writer Maria Panaritis at 215-854-2431 or firstname.lastname@example.org or on Twitter @panaritism.