- Combined company with trailing-twelve
month sales of $7.4 billion now the largest US-based specialty
apparel retailer focused exclusively on the female consumer
- Trailing-twelve month combined adjusted
EBITDA of $661 million before expected synergies, with significant
free cash flow acceleration expected
- $150 million in annual run rate
synergies identified, expected by end of the third year
post-closing
ascena retail group, inc. (NASDAQ:ASNA) today announced that it
has completed its acquisition of ANN INC. for a combination of cash
and ascena stock in an accretive transaction.
With the completion of the merger, ANN INC. shares will be
delisted from the NYSE and trading will cease at the close of
business on Friday, August 21st. ANN INC. will continue to operate
as a wholly-owned subsidiary of ascena.
With the addition of the Ann Taylor, LOFT, and Lou & Grey
brands, ascena is now one of North America’s largest and most
diversified specialty apparel retailers, with $7.4 billion in
trailing twelve month sales, a combined fleet of over 4,900 stores,
and over 70,000 associates.
David Jaffe, ascena’s President and Chief Executive Officer,
commented: “This powerful merger joins two strong and highly
complementary organizations, and dramatically reinforces our
leadership position in women’s specialty apparel retailing. The
acquisition positions ascena as the third largest specialty apparel
retailer and the single largest focused on women’s apparel, with a
diverse brand portfolio that serves women of all ages, sizes and
demographics.”
Jaffe concluded, “We expect to leverage ascena’s
state-of-the-art distribution and fulfillment centers and its
shared services capabilities to rapidly and comprehensively
integrate the ANN INC. brands, and drive significant value to our
stockholders. We have identified $150 million in annualized run
rate synergies resulting from this transaction that we expect to
capture by the end of the third year post-closing.”
Kay Krill, President and Chief Executive Officer of ANN INC.,
added, “As we embark on this next chapter in ANN INC.’s history, I
am very excited about the opportunities ahead for our brands and
our business. Combined with ascena, we have a stronger competitive
position and financial base as part of the nation’s largest
specialty retailer focused exclusively on women’s apparel. In
taking this next step, our focus on our clients remains unchanged.
We look forward to continuing to be her go-to wardrobing
destination by delivering the same great fashion, the same high
level of quality and service, and the seamless shopping experience
that are hallmarks of shopping with our brands.”
Excluding transaction and integration expenses, the acquisition
is expected to be accretive to EPS within the first year
post-closing, accelerating to greater than 20% accretion to EPS
thereafter. Additionally, ascena expects the combination to
generate significant cash flow, which will enable rapid
de-leveraging while supporting planned levels of capital
expenditures.
Transaction Details
Under the terms of the transaction, ANN INC. stockholders will
receive $37.34 in cash and 0.68 of a share of ascena common stock
for each share of ANN INC. common stock. The transaction gives ANN
INC. an enterprise value of approximately $2.0 billion.
ascena financed the cash portion of the acquisition through a
$1.8 billion senior secured term loan it placed on July 29,
2015.
Guggenheim Securities and Goldman, Sachs & Co. acted as
financial advisors to ascena. Proskauer Rose LLP acted as legal
counsel to ascena in connection with the transaction. J.P. Morgan
Securities LLC acted as the exclusive financial advisor to ANN INC.
in connection with its strategic review process and the
transaction. Wachtell, Lipton, Rosen & Katz acted as legal
counsel to ANN INC. in connection with the strategic review process
and the transaction.
About ascena retail group,
inc.
ascena retail group, inc. is a leading specialty retailer
offering clothing, shoes, and accessories for missy and plus-size
women under the Ann Taylor, LOFT, Lou & Grey, Lane Bryant,
Cacique, maurices, dressbarn, and Catherines brands, and
for tween girls under the Justice brand. ascena retail
group, inc. operates through its subsidiaries approximately 4,900
stores throughout the United States, Canada and Puerto Rico. For
more information about ascena retail group, visit ascenaretail.com,
AnnTaylor.com, LOFT.com, louandgrey.com, lanebryant.com,
cacique.com, maurices.com, dressbarn.com, catherines.com, and
shopjustice.com.
Forward-Looking Statements
In addition to historical information, this document contains
forward-looking statements within the meaning of Section 27A
of the U.S. Securities Act of 1933, as amended, and
Section 21E of the U.S. Securities Exchange Act of 1934, as
amended. These forward-looking statements, which are based on
current expectations, estimates and projections about the industry
and markets in which ascena and ANN operate and beliefs of and
assumptions made by ascena management and ANN management, involve
uncertainties that could significantly affect the financial results
of ascena or ANN or the combined company. Words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” variations of such words and similar expressions are
intended to identify such forward-looking statements, which
generally are not historical in nature. Such forward-looking
statements include, but are not limited to, statements about the
benefits of the transaction involving ascena and ANN, including
future financial and operating results, the combined company’s
plans, objectives, ratings, expectations and intentions. All
statements that address operating performance, events or
developments that we expect or anticipate will occur in the future
— including statements relating to creating value for stockholders
and integration of ascena and ANN — are forward-looking statements.
These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are
difficult to predict. Although we believe the expectations
reflected in any forward-looking statements are based on reasonable
assumptions, we can give no assurance that our expectations will be
attained and therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such
forward-looking statements. For example, these forward-looking
statements could be affected by factors including, without
limitation, the ability to successfully integrate our operations
and employees; the ability to realize anticipated benefits and
synergies of the transaction; the potential impact of the
announcement of the consummation of the transaction on
relationships, including with employees, customers and competitors;
the ability to retain key personnel; the ability to achieve
performance targets; changes in financial markets, interest rates
and foreign currency exchange rates; negative rating agency
actions; and those additional risks and factors discussed in
reports filed with the SEC by ascena and ANN from time to time,
including those discussed under the heading “Risk Factors” in their
respective most recently filed reports on Form 10-K and 10-Q.
Neither ascena nor ANN undertakes any duty to update any
forward-looking statements contained herein.
Non-GAAP Financial Results
The financial information included herein has been adjusted to
exclude certain one-time items such as acquisition-related,
integration and restructuring expenses, asset impairment charges
and accelerated depreciation of fixed assets. The Company
believes that all such expenses are not indicative of our
underlying operating performance. In addition, this release makes
reference to the financial performance measure of earnings before
interest, taxes, depreciation and amortization, as adjusted
for the previously mentioned items. ascena considers adjusted
EBITDA to be useful to investors because it believes that it is an
important indicator of ascena’s operational strength. Reference is
made to ascena’s Current Report on Form 8-K filed on July 10, 2015,
Quarterly Report on Form 10-Q for the fiscal quarter ended April
25, 2015 and its Annual Report on Form 10-K for the fiscal year
ended July 26, 2014 for a full discussion on the use of adjusted
EBITDA and a reconciliation of adjusted, non-GAAP financial
measures to the most directly comparable GAAP financial
measure.
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ascenaInvestor
Relations551-777-6895asc-ascenainvestorrelations@ascenaretail.comorICR,
Inc.James Palczynski, 203-682-8229Partnerjp@icrinc.com
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