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Ascena adds plus-size clothes with Charming Shoppes

by Lou Whiteman | Published May 2, 2012 at 2:02 PM

Clothing retailer Ascena Retail Group Inc. moved Wednesday, May 2, to bulk up its plus-size offerings, agreeing to acquire Charming Shoppes Inc. for $890 million in cash.

Terms of the deal call for Suffern, N.Y.-based Ascena to pay $7.35 per share in cash for Charming, a premium of 24.5% over the target's Tuesday close and 89% above Bensalem, Pa.-based Charming's share price on Nov. 30, the day before the company said it would consider options. The purchase price will be financed with $475 million in debt.

The acquisition would add three well-known brands -- Lane Bryant, Catherines Plus Sizes and Fashion Bug -- to Ascena's Dressbarn, Maurices and Justice operations. Charming, which was founded in 1940, operates more than 1,800 retail stores nationwide as well as related e-commerce businesses and Figi's, a direct marketing business. Ascena CEO David Jaffe in a statement called Charming "a superb strategic fit" that continues the company's push to expand.

"We've built a family of retail brands, each serving a unique customer niche, with a culture that embraces the sharing of resources, new ideas and talented team members," Jaffe said. "Over the past few years, we have welcomed into our family new brands and new team members while delivering increasing value to shareholders. We believe that Charming Shoppes will be no exception."

Ascena has not been shy about voicing its interest in dealmaking to help realize its 15% growth target. CFO Armand Correia telegraphed Ascena's potential interest in Charming to The Daily Deal in February. Charming initially said late last year it was retaining advisers to shop its Fashion Bug business in order to focus its resources on Lane Bryant. The company bought Lane Bryant in 2001 for $335 million from Limited Inc., and in 2005 added womens' wear catalog business Crosstown Traders for $301 million.

Barclays plc's Ryan Mash, Adam Rifkin and Andy Taussig advised Charming with Drinker Biddle & Reath LLP's Doug Raymond, Bob Juelke, Laura Hemm and Adam Weinstock and Schulte Roth & Zabel LLP's Marc Weingarten, John M. Pollack, Kristen P. Poole and Ronald Risdon providing legal counsel. Colin Stern is Charming's general counsel. Ascena is being advised by Bank of America Merrill Lynch's Stefan Selig and Jerry Marcus and Proskauer Rose LLP's Steve Kirshenbaum, Julie Allen and Michael Ellis.

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