Dress Barn Inc. (DBRN) is buying Tween Brands Inc. (EWB) in a move that is raising eyebrows because of the companies' different merchandise mixes.

The move is also drawing attention as a possible signpost of more mergers in an industry that is looking for ways to get through one of the longest recessions in memory with as few bankruptcies as possible.

The all-stock deal is worth about $157 million, with women's apparel chain Dress Barn swapping 0.47 share for each share of Tween Brands, which caters to 7- to 14-year-olds. The price represents a roughly 20% premium over Tween Brands' closing price of $5.19 on Wednesday.

The move is especially unusual for the specialty apparel group, where retailers generally do not own their stores, which means there is no hard asset value in mergers, just the taking on of operations and inventory, said Brian Sozzi, retail analyst at Wall Street Strategies.

That can lessen the benefits of doing this kind of deal, Sozzi said. "This seems more of a cost-cutting move" that may give the companies' better terms in making purchases as a larger entity.

The merger does allow Dress Barn to diversify, but Scozzi said that it's "a risky move in this environment."

Sozzi said a better combination would be two specialty retailers in the same field, like teen stores Pacific Sunwear of California Inc. (PSUN) and Quiksilver Inc. (ZQK).

The deal is not a big one because Tween Brands' stock was trading so low, but investors like the deal. Tween Brands' stock was recently up 21% at $6.78, and Dress Barn's shares rose 10% to $14.55.

"There could be companies that buy other companies at these valuations," said Jennifer Black, president of Jennifer Black & Associates. "But nonetheless this deal is unusual because there seems to be no overlap."

Tween Brands will be a wholly owned subsidiary of Dress Barn, with Tween Brands Chairman and Chief Executive Mike Rayden staying on to manage the Tween Brands operation. Rayden is also expected to receive a seat on Dress Barn's board, and Tween Brands Chief Financial Officer Rolando de Aguiar is expected to stay with the company.

Executives from Dress Barn and Tween Brands weren't immediately available for comment.

The deal, which is subject to shareholder approval, is one of the first mergers to be announced by retailers during the 19 month-long recession. One of the few mergers in the sector was Toys "R" Us buying fellow toy retailer FAO Schwarz late last month.

And the Dress Barn and Tween Brands deal runs counter to the trend of specialty retailers divesting operations.

Teen-apparel retailer Abercrombie & Fitch Co. (ANF) recently announced it is closing its higher-end Ruehl chain. Pacific Sunwear of California closed about 150 demo stores that targeted the urban market. American Eagle Outfitters Inc. (AEO) is struggling with its Martin + Osa units.

Dress Barn is a discounter that focuses on professional women with 841 namesake stores and 716 Maurices stores that target younger women. Tween Brands has 908 Justice stores that offer low-priced fashions largely to preteens.

Justice had competition from Gap Inc.'s (GPS) kids stores and is now looking at new pressures from Aeropostale Inc. (ARO), which has been successful at selling to teenagers during the recession and is receiving solid reviews from analysts for its just-opened P.S. from Aeropostale stores that target younger girls and boys.

Tween Brands has been struggling. Last last month, it posted a fiscal first-quarter loss of $1.4 million, or 6 cents a share, compared with earnings of $4.3 million, or 17 cents a share, a year earlier. Sales fell 18% to $205.2 million. The company has been on a cost-cutting drive and has just about completed its transition to the Justice store brand from Tween Brands.

Meanwhile, also in late May, Dress Barn posted a fiscal third-quarter profit that slid by a less-than-expected 4.4%. Sales rose 6.6% to $375.7 million.

The merger agreement has a $5.15 million termination fee and the requirement that if it falls through Tween Brands reimburses Dress Barn's out-of-pocket expenses for up to $1 million.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com