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Destination Maternity to be acquired by French company


French children’s clothing company Orchestra-Premaman SA has won its battle to acquire Destination Maternity Corp.

The deal calls for Orchestra to acquire Destination Maternity for about $7.05 a share, valuing the U.S. retailer at about $100 million according to its share count.

The combined company, which will have estimated revenues of approximately $1.1 billion and create a leading global provider of maternity apparel, childrenswear and baby hard goods, will be operated under the Orchestra name. Orchestra will maintain its corporate headquarters in Montpellier, France. Destination Maternity will maintain its headquarters in Moorestown, N.J., and its distribution facility in Florence, N.J.

The two companies have been engaged in a takeover battle for a year, with Destination Maternity rebuffing Orchestra’s offers. In December 2015, Orchestra disclosed a 13.3% stake in Destination Maternity and urged the U.S. retailer to engage in takeover discussions.

The combined company is expected to benefit from significant annual cost savings of $15 million - 20 million from leveraging Orchestra's direct sourcing. The combination is also expected to result in greater financial strength and flexibility, with the ability to deliver long-term operating performance and improvements through its increased scale and significant synergy opportunities.

Following the closing, the combined company will have an eleven person board, including three independent directors designated by Destination, two additional independent directors, and one employee representative as required by French law. Pierre Mestre, Orchestra's founder and chairman, will serve as chairman of the group.

Destination Maternity shareholders will own approximately 28% of the combined company, and Orchestra shareholders will own approximately 72%

The deal comes as Destination Maternity finds itself challenged with sliding sales. The retailer recently reported a loss of $1.5 million for its third quarter. Its shares have fallen 25% since the beginning of the year.

“This highly complementary business combination, which presents compelling value to our shareholders, is a transformative event for both companies,” said Arnaud Ajdler, chairman, Destination Maternity. “With the creation of one of the world's largest specialty providers of maternity apparel and childrenswear, shareholders of both companies are poised to benefit from a highly diversified product portfolio, improved financial strength and flexibility, and greater distribution and sourcing capabilities. With similar cultures and customers, we believe this transaction will enhance our competitive position and open up new avenues of growth for our respective brands in the United States, Europe, and beyond."

As of October 29, 2016, Destination Maternity operates 1,229 retail locations in the United States, Canada, Puerto Rico and England, including 526 stores, predominantly under the Motherhood Maternity, A Pea in the Pod and Destination Maternity banners, and 703 leased department locations.

Orchestra has a global footprint of 560 plus stores that primarily span across Europe, Africa, and Asia.
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