Destination Maternity to be acquired by French company
French children’s clothing company Orchestra-Premaman SA has won its battle to acquire Destination Maternity Corp.
The deal calls for Orchestra to acquire Destination Maternity for about $7.05 a share, valuing the U.S. retailer at about $100 million according to its share count.
The combined company, which will have estimated revenues of approximately $1.1 billion and create a leading global provider of maternity apparel, childrenswear and baby hard goods, will be operated under the Orchestra name. Orchestra will maintain its corporate headquarters in Montpellier, France. Destination Maternity will maintain its headquarters in Moorestown, N.J., and its distribution facility in Florence, N.J.
The two companies have been engaged in a takeover battle for a year, with Destination Maternity rebuffing Orchestra’s offers. In December 2015, Orchestra disclosed a 13.3% stake in Destination Maternity and urged the U.S. retailer to engage in takeover discussions.
The combined company is expected to benefit from significant annual cost savings of $15 million – 20 million from leveraging Orchestra's direct sourcing. The combination is also expected to result in greater financial strength and flexibility, with the ability to deliver long-term operating performance and improvements through its increased scale and significant synergy opportunities.
Following the closing, the combined company will have an eleven person board, including three independent directors designated by Destination, two additional independent directors, and one employee representative as required by French law. Pierre Mestre, Orchestra's founder and chairman, will serve as chairman of the group.
Destination Maternity shareholders will own approximately 28% of the combined company, and Orchestra shareholders will own approximately 72%
The deal comes as Destination Maternity finds itself challenged with sliding sales. The retailer recently reported a loss of $1.5 million for its third quarter. Its shares have fallen 25% since the beginning of the year.
“This highly complementary business combination, which presents compelling value to our shareholders, is a transformative event for both companies,” said Arnaud Ajdler, chairman, Destination Maternity. “With the creation of one of the world's largest specialty providers of maternity apparel and childrenswear, shareholders of both companies are poised to benefit from a highly diversified product portfolio, improved financial strength and flexibility, and greater distribution and sourcing capabilities. With similar cultures and customers, we believe this transaction will enhance our competitive position and open up new avenues of growth for our respective brands in the United States, Europe, and beyond."
As of October 29, 2016, Destination Maternity operates 1,229 retail locations in the United States, Canada, Puerto Rico and England, including 526 stores, predominantly under the Motherhood Maternity, A Pea in the Pod and Destination Maternity banners, and 703 leased department locations.
Orchestra has a global footprint of 560 plus stores that primarily span across Europe, Africa, and Asia.
Technical problem could prove costly to Amazon
Did Amazon’s website had a technical glitch on one of the biggest shopping days of the year?
According to various reports, Amazon’s site had a glitch on “Super Saturday” that temporarily prevented customers from making purchases.
Amazon has not yet publicly address the problem. But some reports suggested that even a 30-minute-long outage could cost the e-commerce giant millions in revenues, according to a report by Footwear News.
Click here for more.
Walgreens Boots Alliance and Rite Aid agree to sell 865 Rite Aid stores to Fred’s Pharmacy
Walgreens Boots Alliance and Rite Aid have entered into an agreement to sell 865 Rite Aid stores and certain assets related to store operations to Fred’s for $950 million.
The transaction is subject to Federal Trade Commission approval, the approval and completion of the pending acquisition of Rite Aid by Walgreens Boots Alliance, and other customary closing conditions.
“We are pleased to have found an experienced pharmacy operator for these stores,” said Walgreens Boots Alliance Executive Vice Chairman and CEO Stefano Pessina. “With this agreement, we are moving ahead with important work necessary to obtain approval of our acquisition of Rite Aid. We look forward to continuing to provide our customers and patients with the highest level of care and attention.”
The agreement is being entered into to respond to concerns identified by the FTC in its review of the proposed acquisition of Rite Aid by Walgreens Boots Alliance, which was announced in October 2015. Walgreens Boots Alliance is actively engaged in discussions with the FTC regarding the transaction and is working toward a close of the Rite Aid acquisition in early calendar 2017.
The proposed divestiture transaction, if approved, would establish Fred’s Pharmacy as one of the largest drugstore chains in the United States with significant presence in areas such as the South and on the East and West Coasts. Specific locations of the stores to be divested will be announced upon FTC approval of the Walgreens Boots Alliance and Rite Aid merger.
Under the terms of the purchase agreement, Fred’s Pharmacy would acquire 865 Rite Aid stores and certain assets related to store operations, and expects to continue to employ all store associates and certain field and regional associates related to the operations of the acquired stores upon completion of the divestiture. Fred’s Pharmacy would continue to operate the acquired stores under the Rite Aid banner during a transition period. If the FTC requires divestiture of more than the 865 Rite Aid stores currently contemplated by the purchase agreement and Walgreens Boots Alliance agrees to sell such stores, the purchase agreement requires Fred’s to purchase such additional stores.
Walgreens Boots Alliance continues to expect that it will realize synergies from the acquisition of Rite Aid in excess of $1 billion, to be fully realized within three to four years of closing of the merger. These synergies, as previously disclosed, are expected to be derived primarily from procurement, cost savings and other operational matters.
“We greatly appreciate the dedication of our Rite Aid associates who are taking great care of our customers and patients during this period," said Rite Aid Chairman and CEO John Standley. "We look forward to working closely with Fred’s to ensure a smooth, successful transition for our customers, patients and associates in the divested stores.”