Ascena Buying Lane Bryant Owner in $890M Deal

SUFFERN, NY-Ascena Retail Group Inc., based here, and Bensalem, PA-based Charming Shoppes Inc. said Wednesday they’ve entered an agreement for Ascena to buy the parent company of Lane Bryant in a cash deal for about $890 million. It’s expected to close by the end of this quarter.

In a statement, Ascena’s president and CEO, David Jaffe, calls the Charming Shoppes acquisition “a superb strategic fit for Ascena. A key component of our growth strategy over the past several years has been to make highly selective and powerful acquisitions.” He adds that Ascena thinks the Charming Shoppes deal “will be no exception.”  

Founded in 1940, Charming Shoppes operates approximately 1,800 stores under the Lane Bryant, Catherines Plus Sizes and Fashion Bug brands. It specializes in plus-size women’s apparel. Ascena’s brands include Dress Barn, Maurices and Justice, all via wholly owned subsidiaries; it operates 2,500 locations across the US, Canada and Puerto Rico.

BofA Merrill Lynch is acting as financial advisor, with Proskauer Rose LLP serving as legal advisors for Ascena in the deal. For Charming Shoppes, Barclays is acting as financial advisor and Drinker Biddle & Reath LLP and Schulte Roth & Zabel LLP providing legal counsel.

In late March, Charming Shoppes released financial results for fourth-quarter and full-year 2011, showing five consecutive quarters of EBITDA growth. During FY ’11, despite “rising product costs, restrained consumer spending and an intensely promotional holiday environment,” the company increased adjusted EBITDA by 62% to $81.4 million and generated operating income for the first time in four years, Charming Shoppes  president and CEO Anthony M. Romano said in a statement at the time.