Ascena Retail to buy Ann Inc. for about $2.15 billion

Mahwah, N.J. – It took close to a year, but Ann Inc., owner of the Ann Taylor and Loft banners, has followed the wishes of major shareholders including Engine Capital LP and Red Alder LLC and agreed to an approximate $2.15 billion buyout from specialty apparel rival Ascena Retail Group Inc. Ascena, whose store brands include Lane Bryant and Dressbarn, will acquire Ann Inc. for $47 in cash and stock per share, a 21% premium over Ann Inc.’s May 15 closing price.



Engine Capital and Red Alder formally asked Ann Inc. to investigate a sale in August 2014. Ann Inc. had reportedly enlisted J.P. Morgan to help evaluate possible sale opportunities. Same-store sales have fallen in three of the last four quarters at Ann Inc., while the West Coast port disruption raised internal expenses in the retailer’s two most recent quarters.



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. The transaction does not require approval by Ascena stockholders.



Ascena has identified $150 million in annualized run rate synergies it expects to generate over a three-year period. Synergies include sourcing and procurement, distribution, logistics and other efficiencies. Additionally, Ascena expects the merger to generate significant cash flow while improving earnings per share.



"I am very proud of all we have accomplished and confident that combining with Ascena is the right next step for Ann Inc.,” said Kay Krill, president and CEO of Ann Inc. “The transaction will make us part of a larger organization with a diversified portfolio of brands focused on the women's apparel market, a strong operating platform and a powerful financial base.”