ANN Purchased by ASNA

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Ann Taylor (NYSE: ANN) Bought for 2.6B

Shares of Ann Taylor gapped over 20% higher Monday as reports circulated that Ascena Group would purchase the retailer in a deal valued at $2.61 billion. The transaction was unanimously approved by the boards of both companies and is expected to close sometime in late 2015.

ANN Premarket Gap Up

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The deal values ANN at $47 per share which is line with current trading levels as of Monday morning and puts the company just above previous all time highs posted in October 2006. The company’s low for 2015 took place in late January where shares traded down to $31.69.  A look at the chart shows today’s action producing a break above a base that was several months in the making.

According to its website, Ascena is a leading national specialty retailer of apparel for women and teen girls, operating, through its wholly-owned subsidiaries, the dressbarn, maurices, Justice, Lane Bryant and Catherines brands. The Company operates through its subsidiaries over 3,800 stores throughout the United States and Canada, with annualized revenues of over $4.5 billion.

Ascena plans to leverage its existing retail infrastructure to realize $150-million in savings over three years in items such as procurement, back office functions, distribution, and logistics.

Shares of Ascena gapped up also Monday morning but as of this writing have faded to $13.90, or -2.60% on the day. All time highs for ASNA took place in the first week of January 2015 where the retailer saw its shares trade north of $23. The chart shows it has yet to fill in a gap created after an earnings report in late September.

ASNA Premarket Gap Up and Intraday Fade

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An article by the Associated Press says ANN’s majority stakeholders began considering putting the company up for sale last August. This came on the heels of three quarters of declining performance which, in their view, made the company ripe for purchase by private equity which could help restore some of the brand’s market share.

Low cost trades, higher leverage

Ann’s CEO said about the purchase, “The transaction will make us part of a larger organization with a diversified portfolio of brands focused on the women’s apparel market, a strong operating platform and a powerful financial base.”

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