Suffern, N.Y. Dress Barn said Thursday that it will purchase Tween Brands, which targets 7- to 14-year-old girls, in a stock deal valued at about $157 million.
Under the terms of the deal, Tween Brands stockholders will own about 16% of Dress Barn's outstanding shares once the transaction is complete.
The acquisition also takes care of Tween Brands’ outstanding bank debt.
Tween Brands has struggled during the recession. The company reported in May that it lost $1.4 million in its first quarter and said earlier in the year that it would close 30 to 40 stores in 2009 as it converts all of its Limited Too stores to its lower-priced Justice concept.
Dress Barn president and CEO David R. Jaffe said in a statement: “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.”
Dress Barn expects the deal to be neutral to earnings in the first full year that operations are combined and add to earnings in later years.
The transaction, which was approved by both Dress Barn and Tween Brands' boards, is targeted to close in the fourth quarter. Once it is completed, Tween Brands will become a Dress Barn subsidiary, with its chairman and CEO Mike Rayden reporting to Jaffe.