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Dress Barn subsidiary to merge with Tween Brands

25
Jun '09
Dress Barn Inc and Tween Brands Inc jointly announced that they have entered into a definitive agreement pursuant to which a subsidiary of Dress Barn, Inc. will merge with Tween Brands Inc in a stock-for-stock transaction.

Under the terms of the merger agreement, each share of Tween Brands Inc common stock will be exchanged for 0.47 shares of Dress Barn Inc common stock. Based on Dress Barn Inc's stock price of $13.24 as of June 24, 2009, this consideration would be equivalent to $6.22 per Tween Brands Inc share, representing an aggregate equity value of approximately $157 million.

This represents a premium of 20% over Tween Brands, Inc.'s closing stock price on June 24, 2009. Upon closing of the transaction, Tween Brands Inc's stockholders are expected to own approximately 16% of Dress Barn Inc's diluted outstanding shares. In connection with the transaction, Tween Brands, Inc.'s outstanding bank debt will be repaid.

Dress Barn Inc anticipates that the transaction will be neutral to earnings in the first full year of combined operations and accretive thereafter. On a trailing twelve months basis, the combined company has generated in excess of $2.4 billion in net sales and currently operates 2,465 stores. The transaction, unanimously approved by each of Dress Barn, Inc.'s and Tween Brands, Inc.'s Board of Directors, is expected to close in the fourth quarter of calendar year 2009 and is subject to Tween Brands, Inc. stockholder approval and other customary closing conditions.

David R. Jaffe, President and Chief Executive Officer of Dress Barn Inc, commented, “We are excited to have found another strategically compelling transaction to drive superior value to our shareholders. The Justice concept, which offers an attractive mix of well-priced fashion for girls ages 7 to 14, will diversify and complement our existing business. We are also pleased to welcome the talented and proven Tween Brands, Inc.'s team into our organization. We look forward to working together to fully realize the significant potential of this business.”

Upon completion of the acquisition, Tween Brands Inc, which operates the Justice retail chain, will operate as a separate subsidiary of Dress Barn Inc. Its management team, led by Mike Rayden, will continue to manage operations and lead Justice's future growth. Mike Rayden, currently Chairman and Chief Executive Officer of Tween Brands, Inc., will report directly to David Jaffe.

Rayden commented, “We are exceptionally pleased to partner with dressbarn and maurices. We intend to complete the transition of our business to fully leverage the Justice concept and to further cement our leadership position in the $12 billion tween girls apparel market. I believe that our combined company will be formidable and have significant competitive advantages in this increasingly challenging market environment. We believe this merger with Dress Barn, Inc. reinforces our ability to generate ongoing returns for shareholders.”


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