NEW YORK (TheStreet) --Shares of Ann Inc. (ANN), the parent company of the apparel and accessories retailer Ann Taylor and Loft, are surging higher by 21.88% to $47.18 in pre-market trading on Monday morning, after the company announced that it has agreed to sell itself to Ascena Retail Group (ASNA) for $47 per share.
The transaction gives Ann an enterprise value of $2 billion.
Ann has struggled in recent quarters due to a weak retail environment, which has been characterized by heavy discounting and strong competition, according to the Wall Street Journal.
The boards of both companies have unanimously approved the transaction, which is expected to bring in more than $7.3 billion in annual sales.
Shares of Ascena are up by 9.08% to $15.50 in pre-market trading today. The company is a national specialty retailer offering clothing, shoes, and accessories.
"Based on our board's thorough and wide-ranging review process, we are confident that this agreement with Ascena is in the best interests of Ann Inc.'s stockholders. Our stockholders will receive approximately 80% of the purchase price in cash, providing immediate and certain value, and also have the opportunity to participate in the upside of the combined company as a result of the stock portion of the purchase price. We are delighted with this outcome for Ann Inc.'s stockholders," Non-executive company chairman Ronald Hovsepian said in a statement announcing the merger.
"With the addition of the Ann Taylor and LOFT brands, Ascena will become one of North America's largest and most diversified specialty apparel retailers, with a tremendous set of opportunities to continue to expand its leadership position," Ascena CEO David Jaffe said in the same statement.
The transaction is expected to close in the second half of 2015.