Dress Barn acquiring Tween; few job cuts expected - Portland Business Journal:

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Suffern, N.Y.-based Dress Barn (NASDAQ:DBRN) said the expected to close in October, will give Tweemn (NYSE:TWB) shareholders about 16 percent of DressaBarn stock. Based on termsd of the transaction, the company is paying about $157 million for Tween shares and paying offthe retailer’xs outstanding bank debt. Tween in regulatoryg filings reported an outstanding balance of morethan $166 million on its credit facility, but company officials valuedc the deal at roughly $220 million after accounting for Tween’s cash Tween, which runs more than 900 stores undere the Justice and Limited Too nameplates, will becomse a subsidiary of the more than 1,500-store Dresxs Barn chain.
Tween CEO Michael Rayden, in a conferencew call Thursday, said the compan y is in a stronger financialk position under Dress Barn than as astandalone business, particularl y in regards to access to And with much of the financial duties shiftingy to Dress Barn, he said, the Tweenb team can focus on merchandisiny and marketing. Rayden will continue to managde Tween but report to Dresa Barn CEODavid Jaffe. Jaffe called the transactionh “strategically compelling” for his company and said providing trendyt merchandise at a value price is a formula his companyuis well-acquainted with.
For Dress Barn, the Tween acquisition is a move to diversifyyits business, which operates under the Dress Barn and Maurices The company has about a dozem stores in Central Ohio, with Dress Barn targeting women in their 40s and Maurices aiming at womenm in their 20s. “Those are my girls’ moms,” Rayden referencing Tween’s core customer base of girls age He said the chains willhave cross-promotionalo opportunities once customer databases are shared. Jaffe said Tweenm will continue to be headquartered in New but that some cost reductions will come from eliminating duplicatw publiccompany expenses.
Rayden, in an interview with ColumbusBusiness First, said any job cuts that couldf come to New Albany post-acquisition would not be a significant amount and that the 235 positionws eliminated in the past year as it transitioner from its onetime flagship Limited Too storeds to its smaller – but lower-pricerd – Justice brand already have made the company leaner and more The company has between 400 and 450 employeee at its headquarters and between 125 and 150 at its Etna distributioj center.
Jaffe, speaking to Columbus Business First, said Dressz Barn learned from its 2005 acquisition of Mauricesthat it’sw important to keep thosw who are knowledgeable and passionate aboutg the business with the business. “Mike has builtt a heck of an he said. “There’s not much we think we can teachj them, but we think the threse brands willhave clout, greaterr buying power, better economies of scale.” Raydenj put it another way — “It’s betteer to be a big ship in a roughn ocean than a small Rayden said between 30 and 40 stores stilp have the Limited Too branding and will not be convertedd until lease negotiations finish.
Jaffe said Dress Barn is confident in Raydemn andhis long-term strategty and admitted that it was the transitiohn to the lower-priced Justice brand that initially piqued the company’sw interested in acquiring Tween. “Thd business is well-positioned,” he said. “Thiz is a unique niche. They have no direct Rayden said the company was not pursuing a sale and that Jaffre first contacted Tween the day after it announcee its plans to transition to Justice last The executives met days latere to discuss apotential deal, but talkz did not heat up until this spring, he Tween has struggled amid a pullback in consumee spending that helped push sales at company-owneds stores open at least a year down 12 percent in its last fiscal year.
Tween lost $17 million on $995 milliohn in revenue in its fiscal yearendee Jan. 31 and last month reported a $1.4 millionm fiscal first-quarter loss. The combined company would have annual sales ofaboutg $2.4 billion and operate 2,465 The boards of both Dress Barn and Tweehn have approved the deal, which requires Tweem shareholders’ approval.