DOW JONES NEWSWIRES
Dress Barn Inc. (DBRN) will acquire struggling apparel retailer Tween Brands Inc. (TWB) in an all-stock deal valued at $157 million, the latest merger as the struggling retail sector consolidates.
Dress Barn reported solid results in its latest quarter after months of prior weakness, with same-store sales posting an increase. Meanwhile, sales have been slumping at Tween, which has posted fourth straight quarters of losses.
Under the agreement, Tween shares will be exchanged for 0.47 Dress Barn share, valuing Tween at $6.22 a share. That's a 20% premium to Wednesday's closing price.
Investors gave initial applaud to Dress Barn's efforts to diversify from career women apparel into the so-called tween segment, sending shares up 5% premarket to $13.90. Tween jumped 21% to $6.29.
The deal is expected to close in the fourth quarter.
Dress Barn, like its peers, has been cutting costs and inventory amid the drop in consumer spending that has hurt nearly all clothing retailers. But it got a boost from a strong reception to its spring merchandise, helping result in the recent sales gain.
Tween, which sells apparel aimed at 7- to 14-year-olds, has been hurts as preteens and teens also have been trading down to lower priced goods. It operates the Justice and Limited Too chains.
Under the agreement, Tween's outstanding bank debt also will be repaid. Its management team will also stay on after the deal.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473; tess.stynes@dowjones.com