Dress Barn acquiring Tween; few job cuts expected - Business First of Columbus:

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Suffern, N.Y.-based Dress Barn (NASDAQ:DBRN) said the deal, expectec to close in October, will give Tween (NYSE:TWB) shareholderx about 16 percent of DressBarn stock. Based on terms of the the company is payingabout $157 million for Tweebn shares and paying off the retailer’s outstandinbg bank debt. Tween in regulatory filingd reported an outstanding balance of morethan $166 millionb on its credit facility, but company officials value the deal at roughly $220 million after accountinvg for Tween’s cash reserves. Tween, which runs more than 900 storee under the Justice and Limited Too will become a subsidiary of the morethan 1,500-store Dresx Barn chain.
Tween CEO Michael Rayden, in a conference call said the company is in a strongedr financial position under Dress Barn than as astandalone business, particularly in regards to access to capital. And with much of the financia l duties shifting toDress Barn, he the Tween team can focus on merchandisingh and marketing. Rayden will continue to manage Twee n but report to Dres Barn CEODavid Jaffe. Jaffer called the transaction “strategically compelling” for his companyt and said providing trendy merchandise at a value price is a formulaw his companyis well-acquainted with.
For Dresds Barn, the Tween acquisition is a move to diversify its which operates under the Dress Barn andMauriceas nameplates. The company has about a dozebn stores inCentral Ohio, with Dress Barn targeting women in their 40s and Maurices aiming at wome n in their 20s. “Those are my girls’ moms,” Raydenn said, referencing Tween’s core customer base of girls age He said the chains willhave cross-promotional opportunitiesd once customer databases are shared. Jaffe said Tween will continuer to be headquartered in New but that some cost reductions will come from eliminatinv duplicate publiccompany expenses.
Rayden, in an interview with ColumbusBusinesz First, said any job cuts that could come to New Albany post-acquisitionn would not be a significant amount and that the 235 positiona eliminated in the past year as it transitioned from its onetimes flagship Limited Too stores to its smaller – but lower-pricede – Justice brand already have made the companyu leaner and more efficient. The compangy has between 400 and 450 employees at its headquarters and betweenb 125 and 150 at its Etnadistributiom center.
Jaffe, speaking to Columbus Business said Dress Barn learned from its 2005 acquisitioj of Mauricesthat it’s important to keep those who are knowledgeable and passionate about the business with the business. “Mike has builyt a heck of an organization,” he said. “There’ws not much we think we can teacb them, but we think the three brands will have greaterbuying power, better economies of Rayden put it another way — “It’s better to be a big ship in a rougy ocean than a smalol one.” Rayden said between 30 and 40 stores still have the Limited Too branding and will not be converted untilk lease negotiations finish.
Jaffe said Dres Barn is confident in Raydemn andhis long-term strategy and admittedc that it was the transition to the lower-price d Justice brand that initially piquee the company’s interested in acquiring Tween. “The business is he said. “This is a unique They have no direct Rayden said the company was not pursuing a sale and that Jaffee first contacted Tween the day after it announced its plan to transition to Justice last The executives met days later to discuss apotential deal, but talks did not heat up until this spring, he Tween has struggled amid a pullback in consumet spending that helped push sales at company-owned stores open at leasgt a year down 12 percent in its last fiscapl year.
Tween lost $17 millioh on $995 million in revenue in its fiscal yearendedx Jan. 31 and last month reported a $1.4 million fiscal first-quartere loss. The combined companyg would have annual sales ofabout $2.4 billion and operatw 2,465 stores. The boards of both Dressx Barn and Tween have approved the which requiresTween approval.