DEAL REPORTER
ANN INC. (NYSE: ANN) conducted a months-long review of available options before announcing Monday it will be acquired by Ascena Retail Group (NASDAQ: ASNA), and no significant disposals are expected in connection with the deal, according to executives from both companies.
In her opening remarks on the conference call held today (18 May) to discuss the deal, ANN CEO Kay Krill said the company's board spent the past several months conducting an extensive review of a wide range of options.
"The review was conducted with the assistance of our outside advisor, JPMorgan, and included evaluating among other things continued execution of the company's long-term plan as a standalone entity, potential transactions with strategic partners and private equity firms, potential acquisition opportunity and potential changes to our capital structure and payout policy, including expanded share repurchase and/or the initiation of a cash dividend," Krill said.
ANN's status as a target had been the subject of extensive speculation in recent months, with a published report in early May saying the company was in advanced talks for a sale to Golden Gate Capital. ANN was willing to look at an offer in the low USD 40-per-share area, and Bain Capital had withdrawn from bidding, according to that 6 May newswire report.
The sale to Ascena values ANN at USD 47 per share for an enterprise value of approximately USD 2bn. Ascena will fund the deal with approximately 80% cash, supported by committed financing of up to USD 2.4bn from Goldman Sachs and Guggenheim. The transaction is expected to close in the second half of 2015.
The transaction multiple is 7.7 times trailing 12-months EBITDA, which drops to 4.9 times when synergies are included, Ascena CEO David Jaffe said Monday.
During the Q&A session of the call, Goldman Sachs analyst Taposh Bari noted that Ascena sold some non-core assets after buying Charming Shoppes in 2012, and asked if there was a similar opportunity within ANN's portfolio.
"If there is, it's de minimis," CEO Jaffe replied.
In addition to Guggenheim and Goldman, Ascena is being advised by Proskauer Rose. Wachtell, Lipton, Rosen & Katz is advising ANN along with JPMorgan.