| 2019-03-25 08:41:55|
ASNA 08:41 03/25 03/25/19
Ascena Retail to sell majority stake in maurices brand in deal valued at $300M
ascena retail group announced that it has signed a definitive agreement to sell a majority interest in its subsidiary, Maurices Incorporated to an affiliate of OpCapita as part of its review to enhance shareholder value. The review includes a comprehensive assessment of its portfolio brands, operations and assets. Management and the company's Board of Directors are overseeing this review, which is currently underway. CEO David Jaffe said, "Structural changes in our industry have impacted a number of retailers. We have not been immune to these challenges. In 2016, we initiated our Change for Growth plan, which is on track to deliver run rate cost savings of $300M to our company by July 2019. We have also identified, and developed plans for, an additional $150M in savings, which will drive operating margin rate expansion. These efforts are expected to deliver a leaner operating model and enhanced competitive capabilities, but we must do more. To create value for our shareholders, we are planning deliberate actions to generate more profitable growth from those brands and operations in our portfolio that we believe have greater long term potential." The maurices transaction is valued at approximately $300M, and the company expects to receive roughly $200M in cash after expenses, while maintaining a significant minority interest. Cash proceeds from the transaction will be used to pay down the company's existing term loan balance and/or for reinvestment in the company's business in accordance with the terms of its credit facilities. The transaction is subject to customary closing conditions, including, among other things, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, and is expected to close by early summer.