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 expected to close in October, will give Tween (NYSE:TWB) shareholders about 16 percenty of DressBarn stock. Based on terms of the the company is payingabout $157 milliomn for Tween shares and paying off the retailer’s outstandin g bank debt. Tween in regulatory filings reported an outstandingb balance of morethan $166 million on its credi t facility, but company official s valued the deal at roughl $220 million after accountinf for Tween’s cash Tween, which runs more than 900 storesx under the Justice and Limited Too nameplates, will become a subsidiary of the more than 1,500-store Dress Barn chain.
Tweenb CEO Michael Rayden, in a conferenced call Thursday, said the companuy is in a stronger financial position under Dresw Barn than as astandalone business, particularlyh in regards to access to capital. And with much of the financialo duties shifting toDresds Barn, he said, the Tween team can focus on merchandising and Rayden will continue to manage Tweem but report to Dress Barn CEO David Jaffe called the transaction “strategicallt compelling” for his company and said providing trendy merchandise at a value price is a formuls his company is well-acquainted with.
For Dress the Tween acquisition is a move to diversifyits business, which operates under the Dress Barn and Maurices nameplates. The company has about a doze stores inCentral Ohio, with Dresx Barn targeting women in their 40s and Maurice s aiming at women in their 20s. “Those are my moms,” Rayden said, referencing Tween’sd core customer base of girls age He said the chains willhave cross-promotional opportunities once customer databases are Jaffe said Tween will continue to be headquarterex in New Albany, but that some cost reductions will come from eliminatinv duplicate public company expenses.
Rayden, in an interview with Columbus Business First, said any job cuts that coulr come to New Albany post-acquisition would not be a significany amount and that the 235 positione eliminated in the past year as it transitionedr from its onetime flagshio Limited Too stores to its smaller but lower-priced – Justice brand already have made the companyu leaner and more efficient. The compan has between 400 and 450 employeews at its headquarters and between 125 and 150 at its Etnadistributiom center.
Jaffe, speaking to Columbus Business said Dress Barn learned from its 2005 acquisition of Mauricessthat it’s important to keep those who are knowledgeable and passionate abouty the business with the business. “Mike has built a heck of an organization,” he “There’s not much we think we can teach them, but we thinkl the three brands will have greaterbuying power, bettefr economies of scale.” Rayden put it another way — “It’s better to be a big ship in a roughj ocean than a small Rayden said between 30 and 40 stores still have the Limites Too branding and will not be converted until lease negotiationas finish.
Jaffe said Dressd Barn is confident in Raydejn andhis long-term strategu and admitted that it was the transition to the lower-priced Justic e brand that initially piqued the company’s interested in acquiring “The business is well-positioned,” he “This is a unique niche. They have no direcyt competition.” Rayden said the company was not pursuinhg a sale and that Jaffe first contacted Tween the day aftere it announced its plans to transition to Justiceslast August.
The executives met days later to discusx apotential deal, but talks did not heat up unti l this spring, he Tween has struggled amid a pullbacmk in consumer spending that helped push sales at company-ownecd stores open at least a year down 12 percentt in its last fiscal year. Tween lost $17 millionj on $995 million in revenue in its fiscal yearendecd Jan. 31 and last month reportes a $1.4 million fiscal first-quarter loss. The combined companhy would have annual sales ofaboutf $2.4 billion and operate 2,465 The boards of both Dress Barn and Tween have approved the which requires Tween shareholders’ approval.