NEW YORK (TheStreet) -- Shares of Ascena Retail Group (ASNA) are rallying, higher by 5.6% to $14.86 on heavy volume in late morning trading on Tuesday, one day after the national specialty retailer announced that it will be acquiring Ann Inc. (ANN) for $47 per share.
The transaction values Ann at about $2 billion, and is expected to close in the second half of this year.
"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 in the women's apparel market," Ascena CEO David Jaffe said in a statement yesterday.
This morning, Ascena Retail was issued several positive analysts' notes.
FBR Capital upgraded the company to "outperform" from "market perform," saying synergies from the Ann acquisition are under-appreciated following yesterday's sell-off.
FBR analysts are positive on the acquisition deal, and raised its price target for Ascena shares to $20 from $12.
SunTrust analysts are also upbeat on the deal and said that the decline in Ascena's stock is unwarranted.
Piper Jaffray also tells investors to use yesterday's pullback in shares of Ascena as a buying opportunity.
Piper said it sees the potential for "significant" share appreciation from the Ann acquisition. Analysts at Piper raised their price target on Ascena shares to $18 from $16, and kept its "overweight" rating.
About 4.61 million shares have changed hands as of 11:24 a.m. ET today, compared to its average trading volume of about 2.15 million shares a day.